Gold price dipped Monday morning, trading lower by $3.50 at $1,536 per ounce

The gold price dipped Monday morning, trading lower by $3.50 at $1,536 per ounce. The price of gold held steady despite sharply lower prices for cyclically-sensitive commodities such as oil and copper.

Investment demand for gold has been one of the driving factors behind the yellow metal’s rally in recent years. Since early May, however, it has declined amid heightened uncertainty surrounding the European sovereign debt crisis and the likelihood that the Fed will not launch QE3 in the near future.

Despite the fact that it has remained “stagnant” of late, investment demand for gold may be due for a rebound in the weeks ahead, according to MF Global.

In a note to clients, Tom Pawlicki – precious metals & energy analyst at MF Global – wrote that “Uncertainty in Europe will still dominate, in both the prospect for an ECB rate hike and the Greek bailout. It appears that both could be settled by early-July, which may end up being positive for the euro. Gold could then benefit from either resulting dollar weakness if the issues are resolved or from safe-haven if they’re not. This may cause investment demand to return this month after ETF holdings, open interest, and COT data have been stagnant since hedge funds exited in early-May.”

Pawlicki went on to say that “We don’t see too much weakness in store for gold, however, as support will be offered by the possibility that economic weakness remains simply a ‘sub-par recovery,’ including a lack of progress on the US debt ceiling negotiations, any safe-haven demand stemming from Greece, as well as potentially higher Chinese commodity demand.