Gold steady above $1,300 as geopolitical tensions support

Singapore: Gold was off to a muted start on Monday as equity markets firmed, but the safe-haven metal held above $1,300 an ounce as the geopolitical situation in the Middle East remained tense.  

Fundamentals    

Spot gold was flat at $1,308.20 an ounce, after hitting a three-week high of $1,322.60 on Friday. US gold slipped $1 to $1,310. Asian stocks rose in early trade on Monday following Wall Street's rally as Moscow said it had finished military exercises in southern Russia, which the United States had criticized.     

However, tensions remained high over the weekend.  Artillery shells slammed into the outskirts of the Ukrainian city of Donetsk on Sunday as government forces tightened the noose around the rebel-held redoubt and called on pro-Russian separatists to surrender.      

In the Middle East, special forces loyal to Iraqi Prime Minister Nuri al-Maliki were deployed in strategic areas of Baghdad on Sunday night after he delivered a tough speech indicating he would not cave in to pressure to drop a bid for a third term, police sources said.      

The United States conducted a third day of air strikes on Sunday in Iraq against the Islamic State insurgent group. Despite the geopolitical tensions, bullion investors continued to be worry over a possible tightening in US monetary policy and weak physical demand. Hedge funds and money managers cut their bullish bets on gold futures and options as the yellow metal's prices fell in the week to August 5, the Commodity Futures Trading Commission said on Friday.      

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 1.79 tonnes to 795.86 tonnes on Friday.