European gold slips

Gold prices slipped on Monday as weakness in oil prices, base metals and equities prompted bullion investors to lock in profits, analysts said. A report from the Bank of International Settlements warning about inflationary pressures also dampened sentiment, they said, adding gold was seen trading in a range this week, with a bias to the downside.
"There is not an individual factor. People across the board locked in some profits today and got out of the market," said Michael Widmer, director of metals research at Calyon Corporate and Investment Bank.
"The BIS report has also alerted the market to some extent. A lot of people have been focusing on that report in part because it said central banks should keep raising interest rates and that's what spooked a lot of people off."
Spot gold fell as low as $648.70 an ounce and was quoted at $651.30/651.90 by 1432 GMT, against $653.60/655.10 late in New York on Friday. Oil prices fell more than one percent to near $70 a barrel after Royal Dutch Shell said it was preparing to resume exports from a Nigerian oilfield abandoned over a year ago because of militant attacks.
Copper and zinc slipped more than two percent. The UK's leading shares fell for a sixth session in a row, tracking steep falls on Wall Street at the end of last week and with banks and commodities reflecting much of the decline.
Gold traditionally is seen as a hedge against inflation, but higher interest rates could boost the dollar and undermine gold. "For investors that want to build a long position in gold, expecting higher prices later in the year, dips should be bought, even if there is an absence of an obvious catalyst to drive the yellow metal higher in the near term," said John Reade, head of metals strategy at UBS Investment Bank.
Dealers said the market would watch the heavy US economic calendar this week, which includes key housing, consumer and gross domestic product data and the Federal Reserve's meeting.
"I would find it hard for gold to have any substantial upward or downward movement ahead of the Fed meeting. Gold is probably going to be pretty range-bound again," Widmer said. Goldman Sachs (GS) said in a research note that it had reduced its forecast for gold prices over the next year by $25 to $725 following a more neutral stance on the dollar.
"However, GS Research remains bullish on gold prices despite a relatively modest dollar depreciation forecast. They believe gold is currently undervalued and physical demand is likely to remain supportive," it said. In other metals, platinum fell to a one-week low of $1,277 an ounce after rising as high as $1,297.
It was last quoted at $1,278/1,282, versus $1,296/1,301 in New York on Friday, when it rallied to a two-week high of $1,301 on the risk of supply disruptions in South Africa.
Last week, a South African trade union threatened to declare a dispute with the world's third-biggest platinum producer, Lonmin Plc, over overtime. This represents the first legal step towards going on strike. Silver was at $12.90/$12.93, versus $13.04/$13.08 in New York, while palladium was down $5 at $368/$372.