Gold price edges up, after hitting 1-week low on Cyprus deal

Gold edged up on Monday as purchases from jewellers crept in after prices dropped to an almost one-week low on a last-minute deal to bailout Cyprus.

Investors dumped riskier assets and flocked to safe haven gold earlier this month as the crisis in Cyprus re-ignited euro zone debt fears, sending bullion prices to a 1-month high around $1,616 an ounce last week.

Gold added $2.76 to $1,610.71 an ounce by 0319 GMT after earlier hitting $1,602.59 its weakest since March 19.

"As time passes by, people realise that it's not that big a deal. After all, Cyprus is such a small economy. People were getting more and more certain a deal would eventually be struck," said Joyce Liu, an investment analyst at Phillip Futures, referring to the intraday low.

"I think the market has factored this in since last Friday. But if you look at the chart, I would say there is still weakness in gold prices because it has failed to break $1,620." The precious metal touched a record high of around $1,920 in September 2011, when a worsening debt crisis in Europe sparked a buying rush. Gold's 12-year bull run has benefited in the last three years from the euro zone crisis.

U.S. gold futures for April delivery were at $1,610.70 an ounce, up $4.60.

Hedge funds and money managers raised their bullish bets in gold by 63 percent in the week ending March 19, Commodity Futures Trading Commission data showed on Friday.

Gold was also supported as the euro firmed after the Cyprus deal, which involves winding down Popular Bank of Cyprus, also known as Laiki, and shifting deposits below 100,000 euros to the Bank of Cyprus to create a "good bank".

The agreement between Cyprus and the lenders came hours before a deadline to avert a collapse of the banking system in fraught negotiations between President Nicos Anastasiades and heads of the European Union, the European Central Bank and the International Monetary Fund.

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