Traders on the sidelines as gold consolidates above $1,600
After one of the year's lowest trading volumes – just over 90,000 lots – gold maintained levels reached after Friday's sharp rally.
August gold futures were trading at $1,619.90 in after hours trading in New York, little changed on the day.
After a dramatic 4% rise on Friday prompted by dismal US job numbers, investors are taking a breather while they wait for fresh news from Europe.
Reuters quotes Mark Luschini, chief investment strategist at Janney Montgomery Scott, as saying "if we have conditions that could lead to additional duress in the equities market and further easing, and gold doesn't respond positively to that, then we are seeing a breakdown of its fundamental use as a hedge in portfolios."
The yellow metal's fundamentals have also deteriorated with a new survey predicting a decline in gold purchases in India, as the metal reaches a record high in the local currency.
“Physical buying is not there, because prices are very high,” Ketan Shroff, a director with Pushpak Bullions, told Reuters “Everybody is selling. Even retail investors, who had invested at lower levels, are sellers right now.”