ON THE FINAL day before Christmas, gold prices edged higher Monday morning, climbing to $1,665 per ounce (oz) and recovering some of the ground lost last week.
Friday afternoon's London gold fix was $1,651.50/oz, a 2.6% weekly fall and the biggest weekly drop since June.
"[Gold's fall] opens up a move to the next major support, which are the lows in the $1,520s," says Friday's technical analysis note from Scotiabank.
On the physical bullion market, gold demand from traditional world number one India picked up Monday, dealers reported.
"Demand is good," one dealer at a state-run bank in Mumbai told newswire Reuters earlier today.
"Buyers are placing orders for limited stocks with banks. They know the supply situation will remain tight for the next few days. Overseas suppliers are going on leave."
Silver meantime rallied to $30.39/oz before easing slightly, like gold regaining a little.
Stocks and commodities were broadly flat Monday morning, while the euro gained against the dollar but remained below last week's seven-month high.
In New York, the so-called speculative net long position of gold futures and options traders—the difference between bullish and bearish contracts held—fell to its lowest level since August in the week ended last Tuesday, weekly data published by the Commodity Futures Trading Commission show.
Elsewhere in the U.S., politicians negotiating over how to deal with the government's deficit have left Washington for Christmas without any deal being agreed. The U.S. economy is due to hit the so-called fiscal cliff of around $600 billion of spending cuts and tax cut expiries, starting next Monday, if Congress does not agree new legislation.
Here in Europe, current Italian prime minister Mario Monti said Saturday that he will not run in February's parliamentary elections. He added however that he would consider being prime minister if nominated to the post by an elected coalition that would back what he called "the Monti agenda" of economic reforms.
"While he may not have thrown his hat into the ring," says Nicholas Spiro, managing director at consultancy Spiro Sovereign Strategy, "Il Professore has become Il Politico whether he likes it or not. . .[Monti] has made it crystal clear where his political allegiances lie and that he's ready to head
Italy's next government."
Ben Traynor
BullionVault
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Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics. Ben writes and presents BullionVault's weekly gold market summary on YouTube and can be found on Google+
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