| NEW YORK/LONDON
NEW YORK/LONDON Gold tumbled nearly 2 percent on Monday, with the U.S. dollar and Treasuries trumping bullion as preferred safe havens for investors seeking shelter from euro zone woes.
Spot gold closed below $1,800 for the first time since August, and trade remained unusually volatile despite a late revival in gold after some positive noises emerged from a Greek call with its lenders.
Traders noted that the latest round of risk-off selling in commodity and stock markets failed to produce the kind of safe-haven rally that helped gold double its price in a long ascent since the 2008 crisis.
"There's a contingent out there that feels that gold has gone up too fast, too soon, and that it needs to correct more to bring back that real strong support or value buying or bargain hunting," said David Meger, metals trading director at Chicago's Vision Financial Markets.
At 4:35 p.m. EDT, spot gold, which tracks trades in bullion, was at $1,777.80 an ounce, versus Friday's late trade of $1,810.84 in New York. It briefly broke below $1,770 during the session.
U.S. gold futures for December settled down $35.80 -- or almost 2 percent off Friday's close -- at $1,778.90.
"What's different about the euro zone crisis this time is people are moving straight to cash instead of looking at alternative safe assets like gold," Meger said.
U.S. stocks pared losses late but still closed down 1 percent while copper and oil slumped as much as 4 percent as fears of a Greek debt default intensified.
Gold's slide along with riskier assets gained impetus as the dollar rose as much as 1 percent against a basket of currencies. That inverse correlation has reasserted itself recently after being set aside for most of the past month or so.
Longer-dated U.S. Treasuries jumped more than benchmark 10-year bonds, taking yields on the 30-year paper to their lowest level since January 2009.
Gold bounced off session lows as the dollar gave back some gains after a finance ministry official in Athens indicated Greece was close to a deal with international lenders to keep receiving bailout funds.
But bullion remained below $1,800 an ounce. Some fund managers and analysts remained long-term bulls, saying further corrections in the precious metal could spur another round of buying that could help it exceed record highs above $1,920.
Trading got off to a jittery start in New York after news European officials ended a meeting without a solution to the region's debt crisis, stoking fears of possible Greek default.
Cancellation of a visit by Greek Prime Minister George Papandreou to the United States to chair an emergency cabinet meeting at home, and a regional election defeat for German Chancellor Angela Merkel, added to gloom.
The euro recovered slightly against the dollar, giving gold a small boost in late trade as Greece's finance minister said a conference call with international lenders -- the European Union, International Monetary Fund and the European Central Bank -- had been satisfactory.
"I would not read too much into the move," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. "So far we have seen very little willingness from the EU in taking the difficult steps needed to address the crisis."
Gold investors also remained jittery about a two-day policy meeting of the Federal Reserve beginning Tuesday. Analysts expect the U.S. central bank will ease policy, although they said that may not weaken the dollar.
"Depending on what the Fed says or does, things could change pretty quickly for gold," said James Dailey, a portfolio manager who helps manage $220 million for TEAM Financial Asset Management in Harrisburg, Pennsylvania.
Dailey said gold may have to lose another $100 to regain attractiveness.
"I would say $1,700 would probably be the level which I'd expect value buyers to come in. The next leg lower would be $1,660, which should put a bottom to the market's correction."
(Editing by David Gregorio)