Gold down on doubts over central banks' stimulus

Gold bars are displayed at a gold jewellery shop in the northern Indian city of Chandigarh April 11, 2012.

NEW YORK (Reuters) - Gold fell on Monday as lingering uncertainty about whether central banks will take further steps to boost their economies prompted investors to take profits after the previous week's gain.

The metal, a traditional inflation hedge, fell after data showed Japan's economy expanded just 0.3 percent in April-June, half the pace expected, raising doubts about the strength of a global economic recovery. Weaker U.S. equities and losses in commodities led by grains also dragged bullion lower. .N <GRA/>

Gold prices have held in a trading range in the last three months due to uncertainty that central banks will take further monetary stimulus to reinvigorate economic growth.

Most Wall Street economists, however, still expect the U.S. Federal Reserve to do more to stimulate growth this year, with the majority looking for action as soon as September.

"Everybody seems to be waiting for this huge money printing that they think is going to happen which hasn't happened yet. So nobody really wants to bet against it, but at the same time they don't want to go long," said Doug Roberts, chief investment strategist at Channel Capital Research.

Spot gold was down 0.6 percent at $1,610.35 an ounce by 3:40 p.m. EDT (1940 GMT), having earlier hit a high at $1,625.21.

Last week, the metal rose 1 percent on hopes of more easing in China based on disappointing manufacturing data in the world's second-largest economy.

U.S. gold futures for December delivery settled down $10.20 an ounce at $1,612.60.

Trading volume was 40 percent below its 30-day average, preliminary Reuters data showed.

CAUTIOUS TONE

Bullion investors remained cautious. The latest U.S. CFTC trade data showed that hedge funds and money managers cut their net long position in U.S. gold futures and options in the week to August 7, reducing bullish bets on doubts over more imminent monetary stimulus by the Federal Reserve and other central banks.

The metal remains sharply below last September's record high of around $1,920 an ounce, and it is only up 3 percent year to date.

The next major event for the gold market is likely to be the annual meeting of economists and central bankers in Jackson Hole, Wyoming, on August 31.

Among other metals, silver fell 1 percent to $27.81 an ounce. Platinum was down 0.7 percent at $1,383.25 an ounce, while palladium fell 0.8 percent to $573.22 an ounce.

Platinum's unusual discount to gold hovered at nearly $230 an ounce on Monday, near a record level reached in the previous session.

Platinum, which is much more rare than gold and mostly used in autocatalysts for gasoline and diesel engines, has traditionally traded well above gold prices. The metal has suffered from lower demand from European carmakers, its main consumer group.

(Additional reporting by Jan Harvey in London, Rujun Shen in Singapore; Editing by Marguerita Choy and Jim Marshall)