Gold prices dropped 1.8 percent Monday as the dollar rose on disappointment with last week's eurozone summit and key price support for gold failed.
With markets generally unimpressed with Friday's eurozone summit and the European Central Bank last week cutting a key lending rate, the euro fell. That, in combination with a shortage of dollars in Europe, boosted the greenback's value.
The rise in the dollar, which was up against a basket of major rivals 0.64 percent to 78.68, weighed on gold, which fell below $1,700 per troy ounce. Then it fell further -- more than $10 in a few minutes -- on concerns the price has to fall farther before buyers come back into the market and reverse the slide.
With little of note on the economic calendar, echoes from last week's EU leaders' summit find themselves as the top drivers of price action, ForexTV said on its Web site. As we suspected, this is proving to weigh on risk appetite, pressuring stocks-linked currencies and boosting the safe-haven U.S. dollar.
BarChart.com sees support at $1,665.56, which would mark a three percent drop from Friday's closing price.
Uneasiness over the eurozone's future cut investors risk appetite, driving them into the safety of the dollar.
Asian stocks were mixed, while equities in Europe were falling: Germany's DAX stock index was down 1.9 percent, Britain's FTSE 100 fell 0.6 percent and France's CAC 40 dropped 1.2 percent.
In the U.S., stock futures indicated lower opening prices.
Gold for February delivery was off $31.50 to $1,685.30, while spot gold fell $31.02 to $1,682.21.
Silver for March delivery declined 78 cents to $31.47, while silver for immediate delivery slipped 80 cents to $31.45.