Gold prices held above $1,570 an ounce on Monday, taking a breather after last week's sharp correction as traders took to the sidelines ahead of a European Union summit later in the week, and further economic data from the United States.

The metal ended the last session in its worst weekly performance since May, down 3.5 percent on the week after U.S. authorities disappointed bulls by failing to launch more aggressive monetary policy measures, like quantitative easing.

Further easing would maintain pressure on long-term interest rates, keeping the opportunity cost of holding gold at rock bottom, and weigh on the dollar. Investors are still waiting to see whether poor U.S. data will yet force the Fed to act.

Spot gold was little changed at $1,571.63 an ounce at 0853 EDT against $1,571.44 late on Friday, while U.S. gold futures for August delivery were up $5.60 an ounce at $1,572.10.

The broader picture suggests gold could move a bit lower, but it will stay in this range until we see definitively whether the bulls will be right about the printing presses at central banks ramping up again, or whether they will hold fire until the world gets a lot worse, Macquarie analyst Hayden Atkins said.

It is in a wait-and-see kind of mode.

Next week's June U.S. non-farm payrolls report is likely to be central to this, he said. An extremely poor report for May was the catalyst for gold's last rally above $1,600 an ounce.

Prior to that, markets are focused on this week's European summit meeting in Brussels on Thursday and Friday.

European leaders will discuss specific steps towards a cross-border banking union, closer fiscal integration and the possibility of a debt redemption fund, according to a document prepared for the meeting.

But muted expectations for the summit, together with concerns over global economic growth, prompted investors to scale back exposure to riskier assets on Monday.

European shares fell for a third session, the euro wilted and Spanish and Italian government bond yields rose as hopes faded that the summit will produce game-changing measures to tackle the debt crisis.

With the (Federal Reserve) event risk out of the way for now, Europe regains center-stage as EU leaders meet for the summit in Brussels which starts on Thursday, UBS said in a note. But while gold's reaction to (Fed) outcomes is clear-cut, its reaction function when it comes to euro zone headlines has been quite muddled.

The ambiguity and difficulty in trading gold in this type of environment adds to the lack of urgency to hold gold, especially now that balance sheet expansion from the Fed does not seem likely in the near-term.

SUPPORT HOLDS

From a technical perspective, chart support held for gold around the $1,560 an ounce level last week. Below that, support around the metal's May low below $1,530 is expected to cushion any fall.

We prefer to buy dips in gold and expect the range lows near $1,520 to underpin a move back toward the $1,640 area, Barclays Capital said in a note.

Analysts say a break of the $1,640 June high will be needed to re-establish an uptrend.

On the physical markets, a recovery in the rupee from last week's record lows versus the dollar, which pushed up local gold prices, failed to stimulate fresh buying in major consumer India. Traders said they were awaiting further price correction.

Among other precious metals, silver was down 0.4 percent at $26.74 an ounce. The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, rose to its highest since October 2010 on Monday at 58.6 as the grey metal underperformed.

Spot platinum was up 0.2 percent at $1,429.71 an ounce, while spot palladium was flat at $603.75 an ounce.

Given economic problems in the United States and euro zone, we believe the immediate upside for prices of platinum group metals is limited, Bank of America Merrill Lynch said in a note.

Nevertheless, there is scope for both platinum and palladium to perform better next year should the global economy start to stabilize, it added. Hence, our preferred long position in precious metals for (the second quarter) remains gold. Nevertheless, we would swap a long gold trade into a long platinum/ palladium position as we move through next year.