Gold turned higher in muted volume as Wall Street rose for a third straight session on an encouraging New York State manufacturing report and on hopes that French and German politicians meeting in Paris on Tuesday can restore some confidence in the battered euro credit markets.
Bullion is now around $60 below a record $1,813.79 an ounce set on Thursday as stronger investor risk appetite reduced safe-haven buying. The metal has gained as much as 13 percent in the last 12 sessions.
"At this point, people are just looking for the next move. If you are not long already, I don't see any point getting into the market at these levels as gold appears to be waiting for a pullback and reestablish a little lower," said Fred Schoenstein, metals trader at Heraeus Precious Metals Management.
Spot gold was up 0.4 percent at $1,753.49 an ounce. It notched a gain of nearly 5 percent last week, its biggest weekly gain since early November, while the S&P fell for a third straight week.
US gold futures for December delivery were up $14.8 an ounce at $1,757.40.
The gold market is awaiting US data on Monday that will show changes in investment holdings by hedge funds and institutional investors in the second quarter. All eyes will be on John Paulson, the biggest holder of the SPDR Gold Trust.
Market worries remain that the US recovery is flagging after weak consumer confidence numbers on Friday. Gold was also supported by concerns over sovereign debt in the euro zone and the prospect of rising inflation in Asia.
The Federal Reserve's decision last week to keep interest rates near zero for the next two years has stabilized stock markets, which triggered profit-taking in gold, said Peter Fertig, a consultant with Quantitative Commodity Research, said
The prospect of a third round of quantitative easing unveiled by Fed Chairman Ben Bernanke at a global central banker meeting in Jackson Hole, Wyoming, at the end of the month also underpinned gold's appeal as a hedge against economic uncertainty.
Monday marks the 40th anniversary of the end of the Gold Standard in place since the Bretton Woods agreement of 1944.
Some gold advocates suggested that bringing back the dollar-bullion peg could lessen the threat of inflation and currency volatility. However, most economists said that global economic growth in the past four decades would have been much slower without the use of monetary tools by central banks.
Copyright Reuters, 2011