TOKYO (Reuters) - Gold prices were steady above $1,040 an ounce on Monday after falling the previous business day, underpinned by a recovery in the euro versus the dollar.
Bullion fell about 1 percent last week, marking its first weekly loss since the week of Sept. 25, following four consecutive weeks of gains.
Spot gold was almost flat at $1,043.60 an ounce at 0309 GMT, compared with New York's notional close of $1,044.40.
It hit a three-week low of $1,025.75 last week, down more than $40 from a record above $1,070 marked on Oct. 14, but has since showed resilience when compared with sharp falls in prices of other commodities, traders said.
"Investor risk aversion on Friday caused a sell-off in equities as well as the euro, resulting in a rise in the dollar.
The firming dollar put pressure on gold," said Koichiro Kamei, managing director at financial research firm Market Strategy Institute in Tokyo.
"But gold's very role as a alternative to currencies is supporting its prices on dips," he said.
There are views that the dollar will remain bearish in the midterm as no immediate change is likely in U.S. monetary policy given concerns over the financial system, highlighted by news that CIT Group filed for bankruptcy, Kamei said.
Buybacks by mining companies to reduce short positions for hedging were also behind gold's resilience, he said.
U.S. gold futures for December delivery stood at $1,044.40 an ounce, up 0.4 percent from Friday when the contract fell $6.70 to $1,040.40 on the COMEX division of the New York Mercantile Exchange.
The number of noncommercial net long positions in U.S. gold futures fell to 241,777 lots in the week ended Oct. 27 from 250,107 lots, a weekly report by the Commodity Futures Trading Commission showed.
It was the second weekly decline from a record outstanding 253,955 lots.
Net long positions could fall further this month if and when hedge fund managers lock in profits ahead of their year-end book closings. But a drastic fall in the number of such positions is unlikely, Kamei said.
"People won't stop rolling over positions without signs that the Federal Reserve will from next year consider how to carry out an exit policy (from its monetary stimulus)," he said.
The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings fell 0.915 tonnes on Friday, making the total weekly decline to 4.575 tonnes.
