LONDON, June 2 - Gold eased in quiet trade in Europe on Monday with a firmer dollar and perky stock markets taking a little gloss off bullion's safe haven appeal. The dollar strengthened as world leaders grappled with the greenback's recent tumble in exchange rate markets at a Group of Eight (G8) summit designed to shore up confidence in the shaky global economy.
"The dollar's a bit stronger today so gold has been a bit off, but London trade houses look as though they are quite happy to keep things quiet until New York opens," one trader said. Delegates at the G8 meeting said the request for the currency debate came from the European side, despite noises from countries like Germany ahead of the summit that leaders would not touch on the issue during their three days in Evian, France. One delegate said on Monday that a specific G8 statement on exchange rates was not to be expected during the course of the day, even if commentary on the matter in the end-of-meeting communique on Tuesday was not ruled out. A firmer greenback spurs selling of dollar-based gold as the precious metal becomes more expensive for holders of other currencies. Gold is typically bought when the dollar weakens.
Dealers said the euro had room to slip further in the run-up to a closely watched European Central Bank rate-setting meeting this week, and that a break for gold below $358 could trigger a flurry of stop-loss selling. But they said gold remained well-supported above $350, with many in the market placing long-term bets on a weaker dollar. "The metal remains rangebound at present, although the extra speculative length last reported by the CFTC (Commitment of Traders report) and consolidation of the U.S. dollar could pose a serious threat to the gold price," Barclays Capital said in a daily report. "The weakness in the PGM (Platinum Group Metals) market is also harming sentiment towards gold and if gold breaks below $360.00/oz there is a risk of a retracement to $352," it added. Spot gold was fetching $361.25/361.75 an ounce at 1027 GMT, down from $364.60/365.35 last quoted in New York.
Bullion now stands more than $12 shy of its 15-week high of $374.40 hit last Tuesday, when the euro surged to lifetime peaks against the dollar. In the currency market, the euro was trading at $1.1686/90, compared with levels above $1.1900 on Friday. In stocks, the FTSE Eurotop 300 index <.FTEU3> was up 1.06 percent at 832.99 points. Silver was down slightly at 4.50/52 from Friday's late New York levels at $4.52/54 an ounce. Platinum dipped in light trade as gold's retreat weighed on a market unsure of its own direction. The metal was last at $636.00/641.00 an ounce against New York's $641.00/646.00.//