LONDON, Oct 22: Gold prices drifted back on Monday morning in Europe, as many market participants turned their attentions to the base metals with the onset of London Metal Exchange (LME) dinner week, traders said.

Spot gold was indicated at $277.50/278.00 a troy ounce, down from the last close of business in New York on Friday at $279.40/280.15 an ounce.

The metal crawled lower at the morning fix to set at $277.55 an ounce, against $279.15 on Friday afternoon in Europe, and with most players looking at developments in the base metals during LME dinner week, the industry’s annual gathering in London.

We have LME week...and generally gold is always quiet throughout that week. Most dealers are out of the office and not even trading in precious metals...they are doing things in base metals instead, one London-based trader said.

Gold bullion lost virtually all of its safe haven gains last week, amid stale long liquidation, as funds jumped ship on the metal’s failure to rally in the face of global uncertainty and the spate of potentially life-threatening anthrax bacteria in the United States.

The lack of surprises out of Afghanistan and, critically, the stalled move upwards in gold prices, lead to the continuation of the unwinding of long positions that began the previous week, Macquarie Research analyst, Kamal Naqvi said.

Although, traders said the metal was finding support on the way down on the back of anthrax scares and some physical demand at the lower levels.—Reuters