Gold fell early on Monday on technical selling after it failed to rise above a key chart resistance, breaking ranks with equities and other riskier assets. Bullion's losses accelerated after it ran into a bout of selling as it was unable to extend gains above $1,760 an ounce - a level the metal last week tried to clear several times, but failed each time.
The metal's losses came when the S&P 500 jumped nearly 2 percent and the dollar fell on increasing hopes that European leaders will find a solution to the region's debt crisis at a summit on Friday. "We have seen gold moving along in tandem with equities. However, it is way too early to say that gold will lose its safe-haven status at some point," said David Meger, director of metals trading at Vision Financial Markets.
Spot gold fell 0.9 percent to $1,729.95 an ounce by 1:26 pm EST (1826 GMT), after rising nearly 4 percent in the previous week. US gold for February delivery fell $17.50 to $1,734 an ounce. Spot silver was down 0.9 percent to $32.28 an ounce. Global markets rallied after the leaders of France and Germany agreed a master plan on Monday for imposing budget discipline across the eurozone, saying the EU treaty will need to be changed in the search for a sweeping solution to its debt crisis.
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