Gold slips on tapering safe-haven demand as Deutsche Bank worries ease

Spot gold was down 0.1 per cent at $1,315.06 an ounce, while US gold futures rose 0.1 per cent to $1,318.60

Gold edged lower on Monday on a firmer dollar and a gain in equities, with the yellow metal losing its safe-haven appeal as concerns about Deutsche Bank's health eased.

Spot gold was down 0.1 per cent at $1,315.06 an ounce as of 0740 GMT, while U.S. gold futures rose 0.1 per cent to $1,318.60.

Deutsche Bank is trying to reach a settlement with US authorities demanding a fine of up to $14 billion for the misselling of mortgage-backed securities.

"With the news that Deutsche Bank is going to be settling at around $5 billion dollars, it is going to be taken fairly positive by the market as we had seen a lot of selling in the equities on Friday," said Jeffrey Halley, senior market analyst at OANDA.

Gold is sidelined at the moment as "everything seems to have calmed down substantially including Deutsche Bank and OPEC production cuts," Halley said.

OANDA sees gold trading sideways between $1,315 and $1,325 an ounce for now, he said.

The absence of top consumer China, where markets are shut from October 1-9 for the Chinese National Day holidays, is expected to keep trading volumes low.

"We see no major investor enthusiasm for gold and prices may have to ease to test the $1,300-$1,310 level before support materialises," said HSBC analyst James Steel in a note.

"Gold's best near-term chance of a rally would more likely come from an oil surge or a deterioration of the financial situation in Europe," Steel said.

US consumer spending fell in August for the first time in seven months, while inflation showed signs of accelerating, mixed signals that could keep the Federal Reserve cautious about raising interest rates.

Positive data usually puts pressure on gold prices, because investors raise bets on a U.S. interest rate hike that would increase the opportunity cost of holding non-yielding bullion.

Hedge funds and money managers raised their net long positions in COMEX gold for the first time in three weeks in the week to September 27.

Holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.13 per cent to 947.95 tonnes on Friday. 

Silver fell 0.2 per cent to $19.12 an ounce, platinum slipped 0.3 per cent to $1,020.80, and palladium was down 0.2 per cent at $718 after touching a seven-week high on Friday.