SINGAPORE: Spot gold edged lower on Friday, still on course for its biggest weekly rise in two months after the euro zone's last-minute deal on containing debt crisis buoyed commodities and equities. Gold rose on Thursday with global stocks and other commodities, after a European Union summit agreed on a 50-percent haircut on Greek bonds, bank recapitalisation and leveraging of the bloc's rescue fund. The lack of details in the deal and challenges lying ahead in execution of the plan will likely keep investors on edge. "There are a lot of potential land mines in the near term," said Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong, "This is not an obviously risk-on environment and we're going to see risk-on, risk-off for the rest of the year." Spot gold retreated from a one-month high of $1,751.99, falling to to $1,736.44 an ounce by 0701 GMT, down 0.4 percent from the previous close The metal remains on course for a 5.9-percent gain from a week earlier, the biggest one-week rise in two months. US gold lost half a percent to $1,738.80, also headed for its sharpest one-week gain in two months with a 6.3 percent rise. Technical analysis suggested that spot gold could rise into a resistance range of $1,762 and $1,773 during the day, before starting a deep correction, Reuters market analyst Wang Tao said. The dollar index edged up after suffering its biggest one-day loss in more than two years, as the euro rally paused. A stronger dollar makes commodities priced in the greenback more expensive for holders of other currencies. The relief on Europe's problems, however temporary, will allow investors to shift their attention to other pressing concerns. "Focus will shift to U.S. economy after recent data painted a mixed picture," said Hou Xinqiang, an analyst at Jinrui Futures in China. "Investors will also pay attention to if China would loosen up its monetary policy, which would be bullish for commodities." Many market watchers expect China's central bank to begin to loosen up its tight liquidity policy by the end of the year, as China's economic growth slows and hopes run high that inflation has peaked. Holdings of the SPDR Gold Trust , the world's biggest gold-backed exchange-traded fund, edged down 0.6 tonnes from a day earlier to 1,243.551 tonnes by Oct. 27, but still up 16 tonnes from a week earlier. Recent data out of the United States showed that the world's biggest economy grew at its fastest pace in a year in the third quarter but consumer confidence in October dropped to a 2-1/2-year low. With the world's biggest economy seeming to have stepped back from the edge of the cliff, investors expect little policy shift out of the Federal Reserve's policy meeting on Nov. 1-2. "In the near term, the market will focus on how central banks across the board are going to shift from neutral or tightening to accommodative or aggressively accommodative policy," said Friesen of Societe Generale. "Gold should slowly drift higher. If we get some significant policy decisions, like an announcement of QE3, it will give a jolt to the upside." Spot silver gained 0.6 percent to $35.26, on course for a 12.6-percent weekly rise -- its biggest in more than three years. The gold-silver ratio, used to measure how many ounces of silver is needed to buy an ounce of gold, fell to a one-month low below 50.

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