By: Clara Denina London 13/06/2011 - Gold fell in European trading on Monday morning when uncertainty over global economic growth weighed on the euro and global equities, leaving investors to mull over their next moves. Business was slow also due to the absence of European countries such as France and Germany for a one-day holiday. This is likely to enhance volatility and general malaise ahead of the open of New York's markets, traders said. Spot gold fell $4.90 to $1,525.90/1,526.70 per ounce. The metal lost 1.1 percent in the previous session, following the euro lower. "Technically, gold has been trading rangebound and seems to find support on the 20-day moving average (of around $1,524) for the past three weeks," broker ANZ said. "A dip below this level may extend gold's slide." In wider markets, the US dollar was flat at 1.4343 against the euro, which is still vulnerable to upsets in the economies of peripheral European economies. In the medium term, expectations that the European Central Bank will raise interest rates in July are set to boost the single currency temporarily. Meanwhile, European shares also fell after continued losses in Asian markets and undermined by disappointing Chinese data. Yearly growth in China's M2 money supply came in at 15.1 percent, an improvement from the previous year but down from 15.3 percent in April and also below analysts' expectations for a growth rate of 17 percent. Reports that the cost of insuring Greek, Portuguese and Irish government bonds against default hit fresh record highs also weighed on the European markets and the euro today. "Pressure on the euro and weaker equities mean that gold is flying into a headwind as we start the week, with support at $1,520 and $1,514 initially," a trader said. "Ultimately low yields on paper will continue to provide a gold supportive environment but the recent failure to extend above $1,555 may prompt disappointment selling from recent entrants," he added. Uncertainty over the US monetary stance ahead of the end of the country’s second phase of quantitative easing (QE2) may also help the appeal of the yellow metal as a safe-haven asset in the coming months. Datawise, the only noteworthy economic event today is the speech from ECB president Jean-Claude Trichet on the euro at 1500 BST. As for gold's investment demand, the US Commodity Futures Trading Commission showed speculative long positions on Comex exceeded short positions by 198,078 contracts in the first week of June, up four percent on the previous week. Among other precious metals, silver fell to a 10-day low of $35.36 per ounce in early trade before settling at $35.46/35.50, still down 67 cents. The metal lost $1.58 or 4.2 percent on Friday after peaking at a 10-day high of $37.86. "Silver looks the weakest of the group, hindered by weakness in gold, and also by growth concerns and weakness in copper on China concerns," the trader said. Further figures are due from China on Tuesday, including the May consumer price index and producer price index, as well as figures on fixed asset investment, industrial production, retail sales and foreign direct investment for last month. Platinum, which hit a five-week high of $1,848 per ounce in the previous session, fell $20 to $1,808/1,818. Palladium also fell below the key $800 level to $798/804 per ounce, down $15. It reached a three-month peak of $819 on Friday. Still, the prospects of the platinum group metals remain positive, with improvements expected in the all-important automotive sector. "Rebounding Japanese car production should provide fresh cyclical support to both metals," broker Credit Suisse said.

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