U.S. gold ends slightly lower as oil, dollar weigh

NEW YORK (Reuters) - U.S. gold futures finished slightly lower in thin trade on Monday, extending last week's heavy losses, as sliding crude oil prices and a firm dollar offset bargain hunting by investors and physical buyers.

Dealers also said the 13 percent decline of gold contracts last week amid a full-scale retreat of other commodities has dented market sentiment.

The active U.S. gold contract GCJ8 for April delivery on the COMEX division of the New York Mercantile Exchange settled down $1.30 to $918.70 an ounce, after trading between $906.20 and $927.50.

Last Thursday, the contract had touched a 4-1/2 week bottom at $904.70 an ounce as investment funds cashed in bullion to cover losses in other financial markets. That was down $129, or 12.5 percent, from its a record high of $1,033.90 last Monday.

George Gero, vice president of RBC Capital Markets Global Futures in New York, said in an email that gold could not hold a reflex rally due to a combination of higher yield of long-term bonds, stronger stocks, a retreating crude oil and a strengthened dollar.

A sharp drop of energy prices dented bullion's appeal as a hedge against inflation. U.S. crude CLc1 had traded as low as $99.95 a barrel in early afternoon trade, and it settled down 98 cents at $100.86 a barrel.

The dollar rallied across the board on Monday on better-than-expected U.S. existing home sales data and J.P. Morgan's higher offer for Bear Stearns shares, which boosted Wall Street stocks.

"There was some scattered buying of gold by fabricators and investors who had waited for this price break for quite some time," Jon Nadler, senior analyst of Kitco Bullion Dealers in Montreal told clients in a note.

Nadler said that the magnitude of last week's losses had not been seen since 1990.