Spot gold edged higher on Monday, after losing 3.5 percent in the first week of 2011, as fears over the eurozone debt crisis buoyed appetite for bullion, and bargain hunting in the physical market provided support. Spot gold edged up 0.4 percent to $1,374.10 an ounce by 0717 GMT. US gold futures also gained 0.4 percent to $1,374.1.
"For the immediate short term, gold is likely to be rangebound. Today's support is $1,360," said Ong Yi Ling, an analyst at Phillip Futures. "If we see gold hold above that level, and if economic data such as this week's retail sales figure, turns out worse than expected, perhaps we could see the gold rally continue."
Spot gold may revisit Friday's low at $1,352.30 per ounce before developing a second round of rebound towards $1,388, said Wang Tao, a Reuters market analyst. The dollar index held steady after rising to its highest level since December 1, as fears over sovereign debt crisis in the eurozone kept the single currency tethered to four-month lows against the dollar.
"From here things are mixed. For the short term, the range remains between $1,350 and $1,380. If the market goes beyond $1,390, we can see gold trend higher again," said a Hong Kong-based dealer. Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, continued to slide, falling about 1.5 tonnes to a seven-month low of 1,271.164 tonnes by January 7. China's gold output is expected to have exceeded a record high of 340 tonnes in 2010, as gold prices hit a series of all-time highs.