LONDON (Reuters) - Gold hit a two-week low on Monday as a broadly weaker euro encouraged investors to lock in profits from last week's run to record highs.
Dealers and analysts also cited some selling to cover margin calls from hefty losses made on stock markets, but overall financial market uncertainty on fear of a U.S. recession was seen as an underlying support for gold's safe-haven role.
Spot gold stood at $864.30/865.00 per troy ounce by 11:51 a.m. EST, its lowest since January 8 -- compared with $881.90/882.60 quoted late in New York on Friday.
"It was an unpleasant day for the euro against the dollar and yen and that filtered through into gold. We've swung from being wildly bearish on the dollar and now the focus has shifted to the euro," Mitsubishi analyst Tom Kendall said.
Market volatility was high, due in part to thinner conditions with the Martin Luther King Day holiday.
The market is now more than 4.5 percent away from the record highs hit at $914 per ounce last week, but dealers and analysts said prices could benefit eventually as worries over the possibility of a U.S. recession intensify.
Global markets were dominated by battered stocks and demand for safe-haven bonds as investors worried that a troubled U.S. economy would drag down others with it.
"Commodities opened the year spectacularly, it's only natural really that we see some profit-taking as the gold market was very long. The currencies have been the main factor this morning," analyst James Moore of TheBullionDesk.com said.
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