Gold Barely Moves as Chinese Demand Offsets Euro Fears

Gold prices hovered in a tight range Monday as doubts that eurozone banks have enough access to cash and uncertainties about the severity of the continent's recession offset physical demand from Asian buyers.

Eurozone leaders were meeting to find more money for the International Monetary Fund, so it could aid member nations, and strengthen budgetary rules for member nations.

Fears that the day's efforts would, once again, be unproductive weighed on the single currency, which slid toward an 11-month low.

European stocks were modestly higher as investors bought shares of companies seen as less vulnerable to a recession.

Gold prices found support from Chinese buying of physical product.

In the very short-term, gold below $1,600 is very attractive within China, UBS analyst Edel Tully wrote after a recent visit to China.

This can be seen from the sharp increases in Shanghai Gold Exchange volumes last week. Combined SGE turnover last week was the strongest since mid-March and SGE premiums versus London hit $21, premiums not seen since mid-October -- and also from the on-the-ground evidence of heightened physical demand seen in our various meetings, she wrote.

Overnight, key Asian stock indexes fell sharply on word that North Korea's mercurial ruler Kim Jong-il had died but later pared those losses to less than 2 percent.

Crude oil drifted lower, sliding below $95 per barrel, as expectations of falling demand in Europe offset concerns over rising tensions with Iran.

The dollar, which surged briefly after news of Kim's fatal heart attack, barely moved against a basket of rival currencies. It was off 0.3 percent to 80.82 on the ICE U.S. Dollar Index Futures.

U.S. stock futures were up, indicating equities would rise when trading starts.

Comex gold climbed 30 cents to $1,598.20, while spot gold fell $2.53 to $1,596.34.

Comex silver was off 58 cents to $29.09, while spot silver dropped 65 cents to $29.10.