* Gold falls on profit-taking after Friday's surge
* Bullish double bottom provides technical support
* U.S. COMEX open interest up, suggests new buying
* Coming up: U.S. ISM service-sector index Tuesday
(Recasts, updates comment, market prices; changes byline,
dateline, previously LONDON)
By Frank Tang
NEW YORK, June 4 Gold fell on Monday as bullion
investors cashed in some of the previous session's sharp gains
to cover losses in U.S. equities, which came under pressure from
signs of a U.S. economic slowdown and Europe's debt crisis.
The metal, which rallied 4.3 percent on Friday, took a hit
from renewed selling on Wall Street as financial markets focused
on Tuesday's emergency talks among Group of Seven finance chiefs
to discuss the euro zone's woes.
Bullion broke its trend of trading in sync with riskier
assets last week with a 3.5 percent rise, after Friday's
surprisingly weak U.S. payrolls report stoked talk that further
stimulus measures may be necessary to reignite growth.
But the metal has so far this year failed to draw sustained
safe-haven bids despite the turmoil in Europe and signs of
economic slowdown in the United States and China.
"Right now the tools to deal with the European crisis and
the U.S. economy are limited and questionable," said Jeffrey
Sica, chief investment officer at SICA Wealth Management LLC,
which has $1 billion in assets.
"So that puts the financial market in a very vulnerable
position and enhances the desire to accumulate safe-haven-type
investments" such as gold, Sica said.
Spot gold was down 0.7 percent at $1,614.89 an ounce
by 2:21 p.m. EDT (1821 GMT).
U.S. COMEX gold futures for August delivery settled
down $8.20 at $1,613.90 an ounce, with volume sharply below its
30-day average and the previous session's turnover.
COMEX's gold open interest on Friday climbed more than 2
percent, suggesting the rally was boosted by new bullish bets by
funds and money managers rather than short-covering, traders
Technical support should underpin gold as the metal formed a
clear double bottom on daily charts after it posted a bullish
outside week last week, CitiFX strategists said in a note.
U.S. BOND YIELDS EYED
Extremely low returns on perceived safe havens such as U.S.
and German bonds are also helping gold.
"Low U.S. and German bond yields leave investors with few
quality assets to choose from and may benefit gold," said James
Steel, chief commodities analyst at HSBC.
Steel said gold prices appeared to have broken away from
their close correlation to U.S. Treasury bonds, a trend the two
had shown earlier this year.
U.S. 10-year Treasury bond yields, which move in the
opposite direction to bond prices, were driven to a record low
below 1.5 percent on F riday after the payrolls data. Yields rose
from historic lows on Mo nday.
Among other precious metals, silver was down 1.7
percent at $28.16 an ounce. Spot platinum fell 1.2
percent to $1,424.25 an ounce, while spot palladium edged
up 0.2 percent at $609.76 an ounce.
2:21 PM EDT LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold AUG 1613.90 -8.20 -0.5 1610.00 1629.70 124,009
US Silver JUL 28.007 -0.505 -1.8 27.955 28.680 30,189
US Plat JUL 1427.30 -5.90 -0.4 1423.20 1449.00 5,442
US Pall SEP 613.90 -0.10 0.0 605.75 616.45 1,717
Gold 1614.89 -10.71 -0.7 1609.48 1627.69
Silver 28.160 -0.480 -1.7 28.010 28.660
Platinum 1424.25 -17.25 -1.2 1427.25 1445.00
Palladium 609.76 1.41 0.2 607.52 613.25
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 127,037 201,920 194,847 25.24 1.98
US Silver 33,317 52,371 52,528 34.04 0.42
US Platinum 5,649 7,458 7,987 18 0.00
US Palladium 1,743 5,777 4,593
(Additional reporting by Jan Harvey in London; Editing by Dale