Gold prices slipped on Monday, weighed by modest risk aversion across commodities as concerns about the euro zone remained, though high oil prices cushioned the slide.
Bullion prices rallied more than 3 per cent last week, as investors took relief after Greece secured a bailout and expectations of further monetary easing boosted gold's appeal as a good inflation hedge.
During a weekend meeting of Group of 20 finance ministers and central bankers, euro zone nations were told to put up more money to fight their debt crisis if they wants more help from the rest of the world.
"There is a softer turn across commodities after the G20 added to the risk anxiety," said Nick Trevethan, senior commodity strategist at ANZ in Singapore.
"Gold failed to break the $US1780 resistance last week and is likely to bounce between $US1760 and $US1780, but the eventual breakout will be towards the upside."
Spot gold lost 0.3 per cent to $US1774.94 an ounce in Asian trade, after posting a 3.3 per cent gain last week. It hit a five-month high of $US1787.11 last Thursday. US gold was little changed at $US1777.
Technical analysis suggested that gold could rise towards $US1797 an ounce during the day, said Reuters market analyst Wang Tao.
Oil prices held near a 10-month high due to heightened worries about tensions over Iran's disputed nuclear program.
The geopolitical instability in the region could propel gold, traditionally a beneficiary of political and economic turmoils, to higher levels, analysts said.
The US dollar weakness also helped underpin the sentiment in gold. The dollar index dropped to its lowest level in more than two months in the previous session.
"So long as the dollar remains weak, it is possible for gold to overtake $US1800 level in the short term," said an official at a Tokyo-based bullion house, but cautioned that gold's upside could be limited if solid evidence of an economic recovery emerged.
Scrap gold has flown into the Tokyo market since late last week, as yen-priced gold rallied to its highest since September and attracted selling interest, he added.
"Our retail prices rose 9 per cent since the end of January. We've seen some liquidation by the general public, not only because of high gold prices but also a weak Japanese yen."
Eyes are on the European Central Bank this week, which is expected to inject nearly half a trillion euros to banks in the second allotment of the three-year long-term refinancing operation (LTRO), to buy more time for Europe's politicians to find a solution to the euro zone debt crisis.
Speculators raised their bullish bets in gold to the highest level in five months during the week to February 21, data from the US Commodity Futures Trading Commission showed.
Reuters
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