MELBOURNE, March 21 (Reuters) - Spot gold held steady on Monday, underpinned by a weaker dollar as the U.S. and European central banks kept alive the prospect of cheaper capital for longer.
FUNDAMENTALS
* Spot gold XAU= was barely moved at $1,255.66 an ounce by 0208 GMT, having finished last week a tad higher. Prices are consolidating below a 14-month peak of $1,282.51 struck on March 11, which was the highest since Jan 2015. Prices had slumped below $1,050 a tonne in December.
* U.S. gold GCcv1 crept up 0.1 percent to $1,254.41.
* Market indicators are flashing signs that investors see inflation - after it was almost non-existent since the credit crisis - on the rise, despite scepticism from the Fed and the relatively slow pace of U.S. economic growth. The dollar stayed on the defensive early on Monday, having extended its losses for a third week in the wake of dovish signals from the Federal Reserve.
* As central bank rhetoric turns more dovish, investors will search for further hints of easing in a week with few data releases to indicate whether years of loose monetary policy are having any material effect. The European Central Bank can cut interest rates again if the euro zone's economy fails to pick up and, under extreme circumstances, it might even consider printing money and giving it out directly to people, its chief economist said in a newspaper interview published on Friday.
* Money managers trimmed their bullish gold bets from a 13-month high in the week to March 15, as they also cut a net long position in copper, U.S. Commodity Futures Trading Commission data showed on Friday. For the top stories on metals and other news, click TOP/MTL or GOL
MARKET NEWS
* The S&P 500 closed in positive territory for the year for the first time in 2016, leading a gauge of stocks across major markets to a fifth week of gains, its longest weekly run in more than two years. MKTS/GLOB
DATA AHEAD (GMT)
0900 Euro zone Current account Jan
1230 U.S. National activity index Feb
1400 U.S. Existing home sales Feb
1500 Euro zone Consumer confidence Mar