Gold Fell To A More Than Four Month Low

Gold fell to a more than four-month low below $1,630 an ounce last week after investors were spooked by minutes from the Federal Reserve which showed concerns about the side effects of quantitative easing.

Monetary stimulus measures taken by central banks in the United States and Europe have helped drive gold to its twelfth year of gains, as investors worried about the debasement of paper currency fled to hard assets.

The Bank of Japan will consider easing monetary policy again this month, while the European Central Bank is expected to hold interest rates unchanged at a meeting on Thursday.

Analysts said the sell-off was overdone, as there is no clear signal that the Fed will scale down or stop its bond purchasing programme any time soon.

"One clear signal for gold to sell off is if we see real rates go higher," said Dominic Schnider, an analyst at UBS Wealth Management in Singapore, "But that's not for now."

Schnider said lower-than-expected inflation globally last year, especially in the last quarter, made gold less attractive to investors, who had become seemingly immune to repeated rounds of quantitative easing.

Spot gold traded nearly flat at $1,658.04 an ounce by 0344 GMT, after rising 0.7 percent in the previous session, but was pressured by the 200-day moving average at $1,660.93.