Trading volumes were low with New York and London markets closed for public holidays.
Demand for gold as a safe-haven investment was also dented as Italy’s anti-establishment 5-Star and League parties abandoned plans to form a government hostile to the European single currency, triggering a rally in the euro. Gold had been trading between about $1,310 and $1,360 since hitting a one-and-a-half-year high in January, but it was pushed lower earlier in May as the dollar strengthened to 2018 highs, making bullion more expensive for buyers using other currencies.
Speculative bets on higher prices have fallen sharply, with funds’ net long position in Comex gold falling to its lowest level in 10 months.
Prices are now trapped between gold’s 200-day moving average at $1,307 and Fibonacci support at $1,286, said Saxo Bank analyst Ole Hansen. “The potential for fireworks is biggest on the upside given the sharp reduction we have seen in speculative longs,” he said.
“If we do break higher, the funds will have to chase the market to rebuild their long positions.”
In other precious metals, spot silver was down 0.2% at $16.44 an ounce.
Speculative investors have become less pessimistic about prices, with data on Friday showing their net short position in Comex sliver at its lowest since February 2014.
Platinum was up 0.4% at $900.50/oz while palladium firmed 0.1% to $980.30.