Gold prices were nearly flat on Monday after the metal gave up early gains following a retreat in U.S. equities due to fading enthusiasm over a European bailout for Spain's debt-stricken banks.

Bullion, which is often used as a hedge against economic uncertainty, has moved in sync with equities through much of this year. It eased 0.1 percent on Monday as investors, initially encouraged by Europe's move to lend Spain's troubled banking sector up to 100 billion euros ($125 billion), turned their focus to the next risks in the euro zone debt crisis and sent the S&P 500 index and crude oil lower.

Greece's general election next Sunday could derail the region's effort to prevent the crisis from escalating and potentially send global financial markets into a tailspin.

We are still in a liquidation phase for gold. Investors are still very concerned about the debt problem, and gold is often a perfect source of liquidity, said Adrian Day of Adrian Day Asset Management, which has $160 million in assets.

Gold, however, should rise when central banks around the world use more stimulus programs to boost their economies, Day added.

Spot gold was down 0.1 percent at $1,592.16 an ounce by 12:19 p.m. EDT (1619 GMT), about $15 off a high of $1,607.95 set earlier in the session.

U.S. gold futures for August delivery were down $2 an ounce at $1,593.40 in low volume.

Gold has struggled for traction above $1,600 an ounce since breaching that level just over a week ago after soft U.S. jobs data sparked talk of a third round of monetary easing and fueled gold's biggest one-day rise in more than three years.

However, that climb quickly lost steam after Federal Reserve Chairman Ben Bernanke gave no further hint of new stimulus measures in a speech last week. Gold lost 2 percent last week.

Meanwhile, platinum group metals outperformed on hopes a solution to the euro zone debt crisis may start to emerge. Platinum and palladium both rose almost 2 percent.

Spot platinum rallied 1.6 percent at $1,444.24 an ounce, while spot palladium was up 1.6 percent at $619.38 an ounce.

Silver was essentially flat at Friday's last quote at $28.48 an ounce.