Gold Steady Ahead of Big Eurozone Summit

Gold prices barely moved Monday as weak physical buying and easing investor interest tempered anticipation of good economic news from the U.S. and hope that this week's big European summit aimed at solving the debt crisis will not disappoint.

Eurozone leaders gather Friday in another effort to reach an agreement on how to stanch the continent's two-year-old sovereign debt crisis before the bond market drives banks or even weak member nations into bankruptcy.

Expectations are mounting and sentiment is certainly tilted towards a positive outcome, London-based UBS analyst Edel Tully said in a note.

Prospects of a step in the (right) direction of further fiscal integration and suggestions that the ECB may be slowly entertaining the possibility of more aggressive measures, should keep risk appetite supported ahead of the summit.

Analysts expect that a report by the Institute for Supply Management will show the U.S. service sector grew in November.

Gold also found support from weakness in the dollar, which was down 0.24 percent to 78.73 against a basket of major currencies.

Equities were also supportive. Asian and European stocks were mostly higher. Futures for the Dow Jones Industrial Average, the Nasdaq 100 and the S&P 500 were all up, pointing to a positive start for the week.

On the other hand, bullion purchases have been weaker, particularly from Asia, and investors have been reducing their long positions on gold, signaling a lack of confidence that last week's 3.9 percent gain will continue and lift the metal above the $1,800 resistance level.

However, a 3 percent decline from gold's current mid-$1,700 range could reverse that hesitation.

A sub-$1,700 price tag would likely encourage physical buyers and opportune investors to step up to the plate, which in turn would help sentiment, said Tully.

Between the two largest gold markets, China probably has more potential to accelerate physical purchases towards year-end, as we move ever closer to the Chinese New Year celebrations. Demand out of India appears to be bucking the seasonal trend this year, as physical buyers are hindered by a weakening rupee.

Gold for February delivery slipped $2.50 to $1,748.80, while gold for immediate delivery slipped $1.85 to $1,744.43.

Silver for March delivery added 19 cents to $32.88, while silver for immediate delivery rose 13 cents to $32.81.