Gold Slides Following 3-Week Gain

Gold slipped on Monday, as investors took profits after three weeks of gains and turned their attention to a U.S. Federal Reserve policy meeting later this week that is widely expected to reaffirm its near-zero interest rate stance.

Spot gold steadied 0.25 percent lower at $1,329.90 an ounce by 3:45 p.m. EDT (1945 GMT). Last week, the precious metal regained the $1,300 level for the first time in a month. It rose 9 percent over the last three weeks.

"I think people want to stay on the sidelines until the Fed meeting and this will generate a lot of two-way business in the next couple of sessions," MKS SA senior vice president Bernard Sin said.

Meanwhile, U.S. gold futures for August settled $6.90 higher at $1,328.40 an ounce, up 0.52 percent.

With the benchmark August contract going into first notice day this week, Phillip Streible senior commodities broker at RJ O'Brien in Chicago said some players with long positions are moving to the sidelines ahead of the week's raft of U.S. data.

"Because they have to deal with the two-day FOMC meeting, GDP data and employment data, anyone who's long gold has to make a decision about rolling over long positions," he said.

He added that the more conservative players were selling out of August gold, waiting until the week plays out, then getting back into long positions after Friday's July jobs report.

Economists polled by Reuters forecast, on average, July payrolls growth of 184,000, a healthy pace that could induce talk the Fed will taper its bond purchases sooner rather than later. If so, gold prices will likely suffer.

"Overall, traders will keep taking profits rather than trying to build long positions until the uncertainty around the timing of the Fed tapering dissolves," MKS SA's Sin said.

The Fed's policy setting Federal Open Market Committee (FOMC) begins its two-day meeting on Tuesday and is expected to release its latest statement on Wednesday afternoon.

The European Central Bank and the Bank of England also meet this week and are expected to repeat or refine their previous guidance that borrowing costs would remain extraordinarily low as long as growth is sub-par and inflation is not a threat.

The dollar, which also pressured gold, rebounded from a five-week low against a basket of major currencies as investors positioned ahead of key U.S. economic data and global central bank policy meetings this week.

Bullion has lost a fifth of its value this year as signs of economic recovery in the United States have sparked speculation the central bank's easy money policy may be winding down.

This month's comments from Fed Chairman Ben Bernanke reassured investors that the central bank will be slow to scale back monetary stimulus, boosting gold for three straight weeks.

But investors will try to glean from the slew of data due out this week any clues to a change in timing.

CHINA GOLD ETFs

The launch of China's first two gold-backed (ETFs) opened to lacklustre performance on the Shanghai Stock Exchange.

HuaAn Gold ETF and Guotai Gold ETF raised a total of 1.6 billion yuan ($260.9 million) in their initial funding round, coming in well below expectations due to sliding gold prices and a recent domestic credit-crunch scare.

In a gauge of investor sentiment, CFTC data showed options and futures of COMEX gold holdings rising by more than 14,500 contracts to reach a total of more than 70,000 in the week to July 23.

Spot silver was down 0.50 percent at $19.90 an ounce, having touched a one-month high of $20.60 last week. The gold/silver ratio rose to its highest since August 2010 at nearly 67.

Platinum rose 1.05 percent to $1,440 an ounce and palladium gained 2.35 percent to $740 an ounce. (Additional reporting by Clara Denina in London and A. Ananthalakshmi in Singapore; Editing by Marguerita Choy)