Gold prices rose 1 percent on Monday, after European leaders inched closer to a concrete plan to solve the region's debt crisis during a weekend meeting, and upbeat manufacturing data from China fed the positive mood across markets. In recent weeks gold prices have followed moves in riskier assets, with the precious metal's safe-haven appeal diminishing after wild price swings in the past quarter.
"There is cautious optimism over the eurozone debt issue and some hope that policymakers will be able to contain it," said Ong Yi Ling, an analyst at Phillip Futures in Singapore. Spot gold rallied 1 percent to $1,657.6 an ounce and eased to $1,653.99 by 0641 GMT, after posting its biggest weekly fall last week with a drop of more than 2 percent. US gold rose as much as 1.4 percent to $1,658.6 before easing to $1,655.20.
But technical analysis suggested spot gold could fall to $1,602.74 during the day, said Reuters market analyst Wang Tao Spot palladium led the rise in precious metals, up 2.7 percent to $627.97, after suffering a decline of 1.5 percent last week. But the metal, used mainly in making autocatalysts for gasoline-powered engines, was still the worst-performing precious metal so far this year, down 21 percent.