Gold prices were steady on Monday, as a weaker euro and oil's losses prompted the market to take a breather after last week's sharp gains. Bullion retraced early losses pressured by news over the weekend that leading economies told Europe it must put up extra money to fight its debt crisis if it wants more help from the rest of the world.
Gold investors also took heart after data showed euro-zone money supply grew 2.5 percent in January on an annual basis.
The metal has risen 13 percent year-to-date on expectations that monetary policy will remain loose in key economies. "The gold market may be straddled between tame physical demand on the one hand and strong currency and investor risk-related buying on the other," said James Steel, chief commodity analyst at HSBC. "Ultimately a bull market needs both in order to sustain a long-term rally," Steel said.
Spot gold inched up 21 cents at $1,772.40 an ounce by 1:59 pm EST (1859 GMT). Bullion rose 3 percent last week for its largest weekly rise in four weeks. US gold futures for April delivery settled down $1.50 an ounce at $1,774.90, as trading volume was about 70 percent below its 30-day average.
The metal has risen more than 13 percent so far this year and analysts are upbeat about its prospects on expectations that monetary policy will remain loose in key economies, cutting the opportunity cost of holding non-yielding bullion. The precious metal struggled to maintain traction above $1,780 an ounce last week despite the price rally.
On Monday, it remained under some pressure from losses in other assets. The euro slipped 0.5 percent against the dollar as investors worried about oil's rally this month hurting global growth. Gold was also weighed down by disappointment over a lack of positive news from the Group of 20 leading economies meeting.
In recent months, better news on the euro zone debt crisis has benefited gold, as the metal tended to rise along with the euro on economic optimism. However, analysts said the correlation between the two remains patchy. UBS in a note that the easing of correlations between gold and the euro should help shield gold if a negative surprise emerges from the euro zone in the near term.
Among other precious metals, silver was up 0.2 percent at $35.41 an ounce. Spot platinum was down 0.4 percent at $1,701.49 an ounce, while spot palladium was down 1.1 percent at $702.22 an ounce. South Africa's Impala Platinum is to rehire thousands of miners sacked for an illegal strike that has halted production for more than a month at the world's biggest platinum mine, a leading union said on Saturday. The strike fuelled a near 5 percent rally in platinum prices last week, taking them to their highest since September at $1,731.50.
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