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Updated from 12:36 p.m. EDT

Gold reversed ground and fell Monday, as oil prices dropped and the dollar advanced ahead of key U.S. economic data this week.

Gold for August delivery fell $1.50, or 0.2%, at $611.30 an ounce, after earlier rising to $616.40.

Among other metals, silver for July delivery dropped 14 cents, or 1.3%, to $11.07 an ounce and copper for July delivery lost 3.9 cents, or 1.2%, to $3.22 a pound.

Gold, which serves both as a hedge against inflation and as a safe-haven asset, received an early boost as crude oil prices rose amid revived tensions over Iran's nuclear ambitions. Later, as profit-takers sent oil lower, crude followed it down.

Crude for July delivery was recently trading down $1.18 at $70.45 a barrel, after adding $1.28 on Friday.

Overnight support for gold and metals also came from a continued strong outlook for global growth. China's trade surplus rose to a stronger-than-expected $13 billion in May, boosting expectations that the giant-economy will continue to gobble up commodities at a fast pace.

In addition, Japan revised its first-quarter growth estimate to 0.8% from 0.5% previously.

"China is more of an export dependent economy

... and the numbers suggest that world economic growth over near 5% is here to stay despite record crude oil prices," writes Chintan Karnani, metals analyst at New Delhi, India-based Insignia Consultants.

"The Chinese economy will not cool down as exports rise," he added, noting that industrial metals such as copper should benefit more from this than gold and silver.

Yet, the same concerns that have rocked commodities and global markets over the past month are likely to persist this week.

Commodities, and especially metals, have been hit by concerns that central banks are raising interest rates to curb growth and inflation pressures, notably from soaring commodities prices.

Last week,

Federal Reserve

Chairman Ben Bernanke and other Fed officials warned that inflation pressures remained too high even if the economy seems poised to slow, signaling to the market that the central bank will likely hike rates at the end of June.

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Gold lost 4.4% last week, while silver fell 7.3% and copper dropped 9%.

This week, a spate of key economic and inflation data might serve to reinforce, or deflate, these expectations. On Tuesday, U.S. retail sales and producer-price inflation data for May comes out, followed by consumer price inflation numbers on Wednesday.

In addition, markets will tune in as Bernanke makes no less than three speeches this week, in appearances on Monday, Tuesday and Thursday.

In a special report released Monday, Citigroup chief U.S. economist Steven Wieting warns that more pain could be felt for those areas of the commodities market that have seen excess speculation.

"If more negative inflation news is released, perhaps the inflation-geared investor should worry, given the composition of the market correction so far," he writes.

The market's speculative run-up, Wieting argues, had ignored the likelihood that central banks would step up their fight against inflation, while it relied on exaggerated global growth estimates.

"Economic activity across the world was very strong at the start of 2006, but ultimately growth rates across the world should be contained to cyclical norms," Wieiting writes.

Expectations of a June hike have also boosted the dollar, adding pressure on commodities. A stronger greenback lowers the value of dollar-denominated commodities such as gold, as it takes less of the currency to buy the same amount of gold.

In recent action, the Dollar Index, which tracks the greenback against a basket of key currencies, was up 0.15%.

Gold bugs still hope that, once the Fed stops raising rates, the dollar will resume a multiyear decline and boost gold as investors seek for a reliable safe-haven asset to replace the dwindling currency.

Responding to Wieting's note, Citigroup metals analyst John Hill also said that while some of the metals, such as copper, were clearly not reflecting fundamentals, he placed gold on a different scale given its monetary use.

Meanwhile, shares of metals miners continued to head lower, tracking the performance of metals. The Philadelphia Gold and Silver index was recently down 1.9%, the Amex Gold Bugs index was down 1.8% and the CBOE Gold index was down 1.4%.

Among the biggest decliners,

Eldorado Gold

(EGO) - Get Eldorado Gold Corporation Report

was down 4.8% and

Meridian Gold


was down 4.3%.

Mittal Steel


(MT) - Get Arcelor Mittal NY Registry Shares NEW Report

was recently down 3% after Arcelor rejected Mittal's revised takeover proposal for the Luxemburg-based steelmaker.

The newly launched

Market Vectors-Gold Miners

(GDX) - Get VanEck Gold Miners ETF Report

exchange-traded fund, which tracks the performance of the Amex Gold Miners index, was down 2.5%.

ETFs tracking the metals were lower. The

iShares Silver Trust

(SLV) - Get iShares Silver Trust Report

was down 1.2%, and the

StreetTRACKS Gold Trust

(GLD) - Get SPDR Gold Shares Report

was down 0.4%.