Gold eases for 3rd session as stocks, euro retreat

LONDON: Gold prices dipped for a third session on Monday, easing in line with stock markets and the euro, as uncertainty over the outlook for US budget talks and a weak chart picture kept potential buyers on the sidelines.

Prices last week broke below their 100-day moving average, which had been a strong support level at $1,703 an ounce. Gold is now trading below a number of key moving averages, suggesting the trend in the metal is weak.

Spot gold was down 0.33 percent to $1,689.51 an ounce by 1117 GMT after falling nearly half a percent in the previous week. US gold was down 0.37 percent to $1,689.50.

The metal briefly rose to a two-week high above $1,720 an ounce last week after the US Federal Reserve pledged to buy $45 billion a month in longer-term Treasuries, a potentially inflationary move that was expected to support gold.

It swiftly retraced those gains, however, in line with other financial markets as investors prepared for year-end.

"This (move in gold) is primarily technical, a continuing ease-back after the FOMC announcement last week," Tom Kendall, head of precious metals research at Credit Suisse, said.

"Technically the chart is looking more bearish. The path of least resistance is now to the downside." Prices were drifting towards the low end of recent ranges towards year-end, he said.

On the wider financial markets, European shares and the euro retreated as investors focused on the fast approaching year-end deadline to avoid the imposition of steep tax hikes and spending cuts in the United States, known as the "fiscal cliff".

A new proposal for tax hikes on incomes over $1 million a year from US Republican House Speaker John Boehner on Sunday was seen as a step forward, but it still remained some way from the position of President Barack Obama.

Credit Suisse's Kendall said gold was taking little support from speculation over the cliff at present.

"If the markets were very concerned about the lack of agreement to date or the potential impact of the fiscal cliff in the first quarter of 2013, you would expect to see gold higher than it is, especially considering the relative weakness of the dollar against the euro," he said.