Gold Climbs Above $1,600 for First Time in More than 2 Weeks

Markets Reuters

Gold rose above $1,600 for the first time in more than two weeks on Monday as an unusual bailout package for Cyprus threatened to trigger fresh turmoil in the euro zone, attracting investors to seek safety in gold. 

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Spot gold rose to a 2-1/2-week high of $1,608.30 an ounce earlier in the day, before easing to $1,600.96 by 0024 GMT, up 0.6% from the previous close.

U.S. gold also hit a 2-1/2-week high, at $1,607.6 an ounce, and pared some gains to $1,600.10.

The euro zone agreed on Saturday to hand Cyprus a bailout worth 10 billion euros ($13 billion), but forced the country's depositors to pay up to 10 percent on their savings despite the risk of a wider run on savings. 

Investors will closely watch a U.S. Federal Reserve policy meeting on Tuesday and Wednesday to assess the central bank's attitude towards aggressive monetary stimulus. Economists expected the Fed to keep buying bonds for the rest of the year to aid the still frail economic recovery. 

Speculators raised net long positions in U.S. gold by 9 percent in the week to March 12 from a more than five-year low of 39,631 contracts to 43,195 contracts, data from U.S. Commodity Futures Trading Commission showed. 

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 But speculators' short positions in gold continued to increase, up nearly 2% from a week earlier to 70,126 contracts, the highest since at least 2006. * Holdings of SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, fell 3.311 tonnes to 1,232.996 tonnes on Friday, the lowest since October 2011.