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[BENGALURU] Gold edged lower on Monday as investors shunned safe-haven assets for equities, with Asian stocks remaining near two-year highs, and as the dollar rose from a nine-month low, reducing the demand for bullion.
"Gold fell slightly as a rally in global stock markets saw investor appetite wane for the precious metal," ANZ analysts said in a note on Monday.
"The safe haven buying that had pushed gold to an eight month higher earlier this month has slowly petered out, with risk appetite improving in recent days," it added.
Spot gold fell 0.3 per cent to US$1,238.01 per ounce at 0434 GMT. Bullion prices have slid steadily since they hit a near eight-month high of US$1,295.97 on June 6.
US gold futures for August delivery fell 0.4 per cent to US$1,237.70 per ounce.
The US dollar index, which compares the greenback against a basket of major currencies, rose from a nine-month low on Monday. However, signs of central banks in Europe moving away from accommodative monetary policies kept the euro and sterling well bid, and capped gains for the US dollar.
"Even though global central banks are trying to normalise their monetary policies, inflation remains low... If inflation pressure is low, I don't think there's much upside for gold prices in the short term," said Argonaut Securities analyst Helen Lau.
US consumer spending rose modestly in May and inflation cooled, according to Commerce Department data released on Friday, pointing to a slow-but-steady economic expansion that could still lead the Federal Reserve to raise interest rates by the end of the year.
The gold market is also repositioning itself with regard to emerging markets after the latest macroeconomic data from China have come stronger than expected, helping ease worries of a slowdown in the region, said Argonaut's Ms Lau.
Asian stocks held two-years highs on Monday, starting the new month on a solid footing while signs of stabilising in China's economy and a recovery in the European economy helped to boost global share prices in the first half of this year.
Holdings at the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.14 per cent to 852.50 tonnes on Friday from 853.68 tonnes on Thursday.
Among other precious metals, silver rose 0.3 per cent to US$16.61 per ounce Palladium rose 0.3 per cent to US$844.00 per ounce while platinum fell 0.4 per cent to US$917.70 per ounce.