LONDON—Spot gold was higher in Europe as confidence that euro-zone leaders can solve the region's debt crisis deteriorated.
Market players warn that price action could be choppy in coming days with many participants away from the market to attend the London Bullion Market Association's annual conference in Montreal.
Gold started the week on a strong footing after a closely watched meeting of European Union finance ministers over the weekend failed to produce an agreement on how to deal with the region's deepening debt woes. Of particular disappointment was news that the approval of the next tranche of bailout funds for Greece has been postponed to the second week of October.
The news boosted bullion, which tends to draw investor interest in times of economic insecurity.
Monday morning, spot gold was at $1,816.65 a troy ounce, up from $1,813 an ounce late in New York on Friday.
In addition to the euro-zone crisis, investors this week will watch for news from the U.S. Federal Reserve's Open Market Committee for signs about further steps that could be taken to boost growth in the U.S. The Fed is expected to signal some sort of economic easing.
However, the announcement of at least some form of stimulus has already been priced into gold, so it would take a much more decisive measure, such as the announcement of a third round of quantitative easing to spark a sharp rally in gold, said UBS analyst Edel Tully.
"Outright balance sheet expansion through QE3 will probably be mentioned as a possibility, but will be kept on hold for now pending further developments in financial markets and the economy," said Ms. Tully. However, "Given that QE3 expectations have been scaled back, any confirmation that further money-printing remains on the table could give gold a boost at this point," she added.
Elsewhere in the precious metal complex, prices were slightly lower. Spot silver was down at $40.245 per ounce, compared with $40.70 late Friday in New York, while spot platinum fell to $1,803.70 per ounce from $1811, and spot palladium was at $723.50 per ounce, from $733.
Write to Francesca Freeman at francesca.freeman@dowjones.com
