Gold settled lower on Monday after a volatile trading session. Prices tumbled earlier with crude oil after a deal on Iran's nuclear program, but recovered as investors covered short positions, traders said.
Early in the day, bullion prices fell 1 percent to a four-month low, after a weekend agreement which halts Iran's most sensitive nuclear activity and suspends some sanctions by the United States and the European Union on several sectors of Iran's economy for an initial six-month period.
Mixed U.S. economic reports had little effect on gold prices. Data showed contracts to buy previously owned U.S. homes hit a 10-month low in October, but a strong rebound in services sector activity early this month suggested some resilience in the economy.
"The problem for gold investors is that the horizon now is so flat in terms of that negative shock from either inflation or deflation,'' said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. "There is just a lack of rationale to stay invested in gold.''
Spot gold touched its lowest level since July 8 at $1,227.34 an ounce in earlier trade, but managed to cut its losses. Bullion was last up 0.3 percent to $1,247 an ounce.
U.S. gold futures for December delivery settled $2.90 lower at $1,241.20 an ounce.
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