Gold Prices Lower on Eurozone Progress

Gold prices fell nearly one percent Monday after European leaders and Italy's new head of state produced specific plans for containing their sovereign debt crisis.

German Chancellor Angela Merkel and French President Nicolas Sarkozy agreed on a series of reforms to present to the European Union on Wednesday, two days before an EU summit that will focus on the crisis.

Further, Italy's new head of state, Mario Monti, began lobbying Parliament for support of his $40 billion austerity and growth package.

That lifted stocks on both sides of the Atlantic and knocked down the dollar, which fell 0.4 percent against a basket of major currencies.

But in a break from a recent pattern, gold did not rise with stocks.

I believe gold is regaining its safe haven status as investors are less than confident in the world's financial leaders and fiat currencies in general, said Mike Daly, gold specialist in the research division of PFGBEST.

Gold also broke with commodities as West Texas Intermediate crude oil, which rose to $101.50 per barrel, led a broad commodity rally that lifted base metals but not precious metals.

Analysts expect gold prices to be range-bound until the critical EU summit on Friday, which may account for the decline in speculative trading on the Comex.

Gold and silver prices are steady ... as we await further news from Europe, said William Rhind, managing director, ETF Securities (US) LLC. Any positive news from Europe specifically pertaining to the continuation of the euro project may cause prices to trade lower and soften demand for gold as a safe haven asset. Any news regarding a potential breakup of the euro, money printing by the ECB or widening of sovereign bond spreads will most likely be gold positive.

Gold for February delivery lost $16.80 to close at $1,734.50, while spot gold fell $9.82 to $1,731.21.

Silver for March delivery declined 31 cents to settle at $32.37, while spot silver retreated 33 cents to $32.34.