* Uncertainty in euro zone continues dominating market sentiment * Spot gold may fall to $1,687 - technicals * Coming up: U.S. existing home sales, Oct; 1500 GMT (Adds comments, details; updates prices) By Rujun Shen SINGAPORE, Nov 21 (Reuters) - Gold traded steady on Monday after its biggest weekly loss since September, as investors remained cautious even after Spain's centre-right opposition won a landslide victory in the election and is expected to launch drastic austerity measures. Market reaction to the news has been wary, with Asian shares dipping and the euro got off to a subdued start in early trade. Gold has moved in tandem with riskier assets, and is still in danger of suffering sharp losses in case of sell-offs in other markets, as investors would have to liquidate their gold positions to cover losses elsewhere since funding has become difficult during the market turmoil in recent months. "We still have not seen the light at the end of the tunnel yet," said Ong Yi Ling, an analyst at Phillip Futures. "We will continue to have headlines from Europe to dominate the sentiment in the market." Uncertainty also hangs over the market about U.S. efforts to reduce its deficit. The top Republican and Democrat on the congressional deficit-reduction panel will say on Monday they have been unable to reach a deal after months of effort, congressional sources said. Spot gold edged down 0.1 percent to $1,723.29 an ounce by 0313 GMT, after a weekly decline of more than 3 percent. On the chart, the 50-day moving average is almost crossing below the 100-day moving average, seen as a bearish technical signal. U.S. gold was little changed at $1,724.20, after having fallen to as low as $1,713.2 earlier in the day. Technical analysis suggested that spot gold could fall towards $1,687 an ounce during the day, said Reuters market analyst Wang Tao. Ong of Phillip Futures expected the $1,700 level to provide support, and said prices could slump towards $1,600 once that level is breached convincingly. Asia's physical market remained muted as buyers held off for lower prices. "Prices didn't correct enough. Prices need to go below $1,700 and stay, otherwise people won't buy," said a Singapore-based dealer. Investment interest in gold remained strong last week, despite the 3-percent price slump. Money managers, including hedge funds and other large speculators, raised their bullish bets in gold futures and options to a two-month high during the week of Nov. 15, as bullion prices held near $1,800 an ounce, data on Friday showed. SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, reported a rise of 3.631 tonnes from a day earlier to 1,293.088 tonnes in its holdings, the highest in more than three months. The ETF witnessed an inflow of 24.422 tonnes last week, the biggest one-week rise in holdings since mid-August. Spot silver led the decline in the precious metals complex, down as much as 1.5 percent to $31.91, before recovering to $32.18. Precious metals prices 0313 GMT Metal Last Change Pct chg YTD pct chg Volume Spot Gold 1723.29 -2.30 -0.13 21.41 Spot Silver 32.18 -0.21 -0.65 4.28 Spot Platinum 1582.50 -5.41 -0.34 -10.47 Spot Palladium 597.99 -3.51 -0.58 -25.20 TOCOM Gold 4256.00 -7.00 -0.16 14.13 38234 TOCOM Platinum 3933.00 -15.00 -0.38 -16.25 7825 TOCOM Silver 78.40 1.70 +2.22 -3.21 318 TOCOM Palladium 1486.00 -18.00 -1.20 -29.14 337 COMEX GOLD DEC1 1724.20 -0.90 -0.05 21.30 7782 COMEX SILVER DEC1 32.21 -0.21 -0.65 4.09 1229 Euro/Dollar 1.3529 Dollar/Yen 76.78 TOCOM prices in yen per gram. Spot prices in $ per ounce. COMEX gold and silver contracts show the most active months

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