Gold bounces on physical buying, off 7-month low

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Gold rose $3.31 an ounce to $1,583.61 by 0326 GMT after posting modest gains on Friday. (Reuters) Gold rose $3.31 an ounce to $1,583.61 by 0326 GMT after posting modest gains on Friday. (Reuters)
SummaryGold rose $3.31 an ounce to $1,583.61 by 0326 GMT after posting modest gains on Friday.

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In other markets, shares edged higher on Monday, while the yen fell to fresh lows on news a reflationary advocate could head the Bank of Japan next month, lifting yen-based gold contracts on the Tokyo Commodity Exchange.

"We have downgraded our average 2013 gold prices by 6.7 percent to $1,690 an ounce, from an expected slowdown in investment demand for gold in the West and a move towards more growth-oriented assets," said ANZ in a report.

"While we have downgraded our near-term views, gold prices should accelerate in the second half on improving demand from India and China."

Hedge funds and other big speculators cut their bullish bets on U.S. commodities by the most in nearly 10 months just before oil and metals prices tumbled this week on rumours a commodities fund was dumping positions, trade data showed on Friday.

Russia and Turkey both raised gold holdings for a second consecutive month in January, data from the International Monetary Fund showed, highlighting central banks' interest in diversifying part of their reserves into bullion.

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