Gold Eases as Risk Appetite Picks Up

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"In the long run, all is good. . ."

Gold slipped below $1,220/oz. in Europe Monday as improving appetite for assets seen as higher risk, such as equities and the euro, lessened interest in the metal as a saf- haven investment.

Losses were limited, however, by expectations that government measures to address elevated sovereign debt levels might ultimately prove inflationary, and as investors bet interest rates would stay low.

Spot gold was bid at $1,217.45/oz. at 1535 GMT, against $1,225.40 late in New York on Friday. U.S. gold futures for August delivery fell $11.20/oz. to $1,219.00.

"I think we will be stalling here amid sluggish interest and improving risk sentiment," said Andrey Kryuchenkov, an analyst at VTB Capital. "In the long run all is good, but for the moment some will be booking profits."

While gold prices are coming under some pressure as risk aversion eases, in the longer term wider economic concerns are still supporting prices, analysts said.

"There are a lot of people who take a longer-term view," said Standard Bank analyst Walter de Wet. "Interest rates are low, so for the next six to 12 months, conditions still favor higher gold prices irrespectively of equity markets rallying."

Gold ETF Holdings at Record

Holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, were steady at a record 1,306.137 tons on Friday.

Investors still have an interest in holding gold in the medium- to long-term to protect against potentially inflationary government measures to service debt.

Precious metals rose in line with other commodities. Palladium, the biggest climber with gains of more than 3%, was at $456/oz. against $439, while platinum was at $1,559.50 against $1,539.50.

Silver was bid at $18.39/oz. against $18.18.

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