Gold inches up after biggest weekly fall in two years

SINGAPORE (June 24) Gold edged higher on Monday after a tumultuous week that saw prices drop the most in nearly two years on fears of an early end to the Federal Reserve's bond purchases and a cash crunch in China.

FUNDAMENTALS

* Spot gold gained 0.07 percent to $1,297.66 an ounce by 0018 GMT. It rose over 1 percent on Friday but recorded its worst weekly performance - down 7 percent - since September 2011.

* Comex gold rose about $5 to $1,297.30.

* Markets were roiled last week after Federal Reserve Chairman Ben Bernanke laid out a strategy for the U.S. central bank to start scaling back its $85 billion monthly bond buying program.

* St. Louis Federal Reserve Bank President James Bullard on Friday said neither the central bank's own economic growth forecasts nor its expectations for continued weak inflation supported a decision to dial back bond purchases.

* China's central bank faced down the country's cash-hungry banks on Friday, letting interest rates again spike to extraordinary levels of some 25 percent for some banks as it stepped up the pressure to contain rampant informal lending.