ET:Gold prices eases as stocks, euro wilt ahead of Ben Bernanke
LONDON: Gold prices eased on Monday as caution ahead of this week's Federal Reserve testimony on monetary policy pressured the euro and stock markets, with a weak start to earnings season and concerns over euro zone debt also keeping investors on edge.
The precious metal slipped towards $1,580 an ounce, surrendering the gains it made on Friday when it put in its best one-day performance in more than a week.
Spot gold was down 0.3 percent at $1,585.44 an ounce at 1023 GMT, while U.S. gold futures for August delivery were down $6.50 an ounce at $1,585.50.
Prices have fallen nearly 1 percent in July, failing to build on June's modest gains as the Fed dampened speculation it was set to announce a fresh round of quantitative easing. Fed chair Ben Bernanke's testimony on Tuesday and Wednesday will be closely watched for signs that its stance on QE is softening.
Bernanke will present his semi-annual monetary policy report to Congress against a background of lacklustre growth at home and a festering sovereign debt crisis in Europe that is increasingly preoccupying U.S. policymakers.
A voting member of the Federal Reserve's policy-setting body, Dennis Lockhart, said on Friday he has edged closer to supporting another round of QE if the sluggish economy can't improve. However another regional bank president reiterated that he did not see any need for additional Fed easing.
Further monetary easing would maintain pressure on long-term interest rates, keeping the opportunity cost of holding gold at rock bottom, as well as weighing on the dollar.
"Right now, after the latest (Fed) meeting at the end of June and the disappointment there, I'm not pricing in any QE3 factor before the U.S. elections," LGT Capital Management analyst Bayram Dincer said.
"The options market is skewed to the downside with a retesting of the $1,526-$1,500 levels," he added. "Gold still has good value under certain conditions, but there is this correlation to the equities market, and some profit taking there can spill over into weaker gold prices."
"We are lacking driving forces for the time being, and gold is stagnating."
