NEW YORK—Gold futures eased Monday, under pressure from a stronger dollar as traders reassessed their view of last week's summit of European Union leaders.
Gold futures surged on Friday along with the euro and other commodities, rising 3.5% after EU leaders announced plans to let the euro zone's rescue fund directly recapitalize troubled banks and make the European Central Bank the region's banking supervisor.
But many commodities pulled back on Monday as investors weighed whether the steps would have an immediate effect on Europe's banking crisis. The euro fell against the U.S. dollar amid reports that the Netherlands and Finland plan to block pieces of the rescue package agreed to last week and data showed continued weakness in euro-zone manufacturing.
"Deep disagreements remain between euro area countries," analysts with Barclays said Monday in a note.
The most actively traded gold contract, for August delivery, was recently down $10.40, or 0.7%, at $1,593.80 a troy ounce on the Comex division of the New York Mercantile Exchange.
The euro was recently at $1.259, down from $1.266 late Friday in New York.
The strength in the U.S. dollar and broad weakness in the euro, "reflecting the ongoing sovereign debt crisis in the euro zone, have also added to the headwinds confronting the gold price," analysts with Morgan Stanley said in a note.
Gold tends to suffer from a stronger U.S. dollar, as it makes the dollar-denominated futures appear more expensive for buyers using other currencies. Gold prices have typically retreated this year when traders were worried about a potential freeze in Europe's financial system, choosing the flexibility of cash, and particularly the U.S. currency.
"It remains to be seen how long the euro zone cheer lasts this week," VTB Capital analyst Andrey Kryuchenkov said in a note, adding that trader focus would likely turn to Friday's closely watched reading on U.S. unemployment.
Also weighing on sentiment on Monday were data showing a continued pullback in China's manufacturing sector. Readings on the sector from both official government data and HSBC's index showed activity slowed in June. Traders keep a close watch on China, which during the last year surpassed India as the world's top consumer of gold.
Silver, which surged by 5% on Friday, was lower on Monday. Futures for September delivery were recently down 0.7% at $27.425 a troy ounce.
