NEW YORK/LONDON (Reuters) - Gold prices edged up on Monday on a better technical outlook after last week’s gains, but the precious metal finished slightly lower for the month of April in a narrow trading range.
Bullion dropped about 0.3 percent in April, posting a third straight monthly decline for the first time since 2000. A strong run of U.S. economic data have hit hopes for more monetary easing by the Federal Reserve, denting investment appetite for the precious metal.
In early trading on Monday, bullion tumbled 1 percent in heavy volume. Then it gradually turned higher. Analysts cited technical buying as the metal held above key support last week.
“Gold posted a bullish outside week last week, adding further fuel to our belief that a base is being formed for the next rally higher,” Tom Fitzpatrick, a strategist at Citigroup’s technical research unit CitiFX.
Gold’s ability to hold above $1,620 an ounce this month, despite several tests of that level, cheered investors.
Fitzpatrick said gold’s next target could be its February high at $1,790 an ounce, but its rise in the near term may be a gradual grind instead of an imminent acceleration.
Spot gold inched up 0.1 percent to $1,664.20 an ounce by 3:42 p.m. EDT (1942 GMT).
U.S. gold futures for June delivery settled down 60 cents an ounce at $1,664. Monday’s volume was about 30 percent below its 30-day average, preliminary Reuters data showed.
Early in the U.S. session, the June contract had tumbled as much as $12 within a minute in one sell-order that involved nearly 8,000 lots. The anomaly and its swift recovery has spurred market talk that trade might have been entered erroneously.
A CME Group spokesman said the exchange’s Stop Logic functionality was triggered on COMEX June futures Globex at 8:31 a.m. EDT (1231 GMT), resulting in a 10-second trading halt. But he said the market worked in an orderly fashion.
CME Group’s Stop Logic offers market participants the opportunity to provide additional liquidity and permits the market to regain its equilibrium.
“It was a very sudden hard drop, but there was no panic that you’d see surrounded a fat finger,” said James Steel, chief commodity analyst at HSBC, referring to the sudden drop.
Analysts said prices tend to sharply recoil following the so-called “fat finger” trade. On Monday, gold prices gradually recovered rather than rebounding sharply.
News that Spain slipped back into recession also pressured gold, traders said, as did a weak report on U.S. spending and a sharp decline in business activity in the U.S. Midwest.
Investors were also wary of buying euros before weekend elections in France and Greece and a European Central Bank meeting this week that could further knock sentiment on the euro zone currency.
Among other precious metals, silver was down 0.9 percent at $30.96 an ounce. Spot platinum eased 0.2 percent at $1,562.59 an ounce, while spot palladium eased 0.1 percent at $677.20 an ounce.
Editing by Bob Burgdorfer; Editing by David Gregorio