By Arpan Mukherjee Of DOW JONES NEWSWIRES WELLINGTON (Dow Jones)--Precious metals were mixed in the Asian session Friday, with gold and silver drifting lower in a narrow band after see-sawing in earlier trade, as a possible Greek default and fears of contagion left investors jittery. The market was closely watching developments in the euro zone, including a luncheon meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel in Berlin for talks on the euro-zone crisis. Despite a stronger dollar against the euro, the downside for gold was capped as investors sought refuge amid a broad selloff on regional equity markets. Japan's Nikkei Stock Average was 0.6% lower and Australia's S&P/ASX 200 was off 0.3%. At 0513 GMT, spot gold was trading at $1,526.30 a troy ounce, down $2.90 from the previous close. Analysts said fears of a potential default by Greece on its sovereign debt, and possible contagion, were also helping prevent gold from falling further amid the stronger dollar. Besides the planned tete-a-tete between Sarkozy and Merkel, euro-zone finance ministers will gather on Sunday followed by a meeting Monday of the EU's Economic and Financial Affairs Council. "Currently investors are nervous as the situation in Greece has deteriorated rapidly this week," Phillip Futures investment analyst Ong Yi Ling said, adding that a stalemate over a further round of economic aid for Greece could cause a flight to safety, increasing safe-haven flows into gold. EU economic commissioner Olli Rehn said Thursday that euro-zone governments will agree at the meeting in Luxembourg to pay the next tranche of rescue loans for Greece, and indicated that the International Monetary Fund, which must also sign off on the loan payment, would agree even if euro-zone governments haven't put a multi-year financing plan in place for the country. Gold, which can serve as safe store of value during times of economic uncertainty, was trading in a tight range between $1,525.80/oz and $1,530.49/oz. "Expectations that the Greek crisis would fuel a summer rally in the yellow metal have thus far been unfulfilled, and this really ought to be a time for bullion to shine at its brightest, all things considered," Kitco Metals senior analyst John Nadler said in a note. But gold could keep trading sideways for some time even if policy makers are able to make a headway in talks and formalize the Greece assistance. The $1,550/oz-$1,570/oz price neighborhood in gold and $38/oz-$40/oz for silver "remain overhead resistance targets that must be demolished convincingly in order for bullish tilts to resume," Nadler said. Some analysts expect silver will remain rangebound for now, but could move above $40/oz later this year if gold moves higher. Spot silver was trading at $35.36/oz, down 23 cents. Spot platinum was up $11 at $1,764/oz, and palladium was at $759/oz, up $5. -By Arpan Mukherjee, Dow Jones Newswires; 64-4-471-5990; arpan.mukherjee@dowjones.com

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