SINGAPORE: Gold inched up on Monday, after rising nearly 1 percent earlier on the euro zone's decision to help Spain's battered banks, which boosted risky assets and pressured the dollar, but gold's gains were outpaced by those of precious metals with industrial uses.
Silver, platinum and palladium outshone gold, with palladium leading the pack with an increase of 2.4 percent, its largest one-day rise in two months.
Euro zone finance ministers agreed on Saturday to lend Spain up to 100 billion euros ($125 billion) to shore up its teetering banks, sending relief to investors increasingly worried about the bloc's debt crisis.
Traders said gold prices came under pressure as liquidation kicked in after the Shanghai market opened because investors chose to lock in profit in the face of fickle market sentiment.
"There has been liquidation in the Shanghai market, and we see offerings from the Chinese," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.
The popular Shanghai gold spot deferred contract rose as high as 329 yuan a gram, or $1,604.73 an ounce, shortly after opening, versus Friday's close at 322.62 yuan. But prices trended lower to stand at 327.62 yuan by the end of the morning session.
Spot gold gained 0.1 percent to $1,596.09 an ounce by 0353 GMT, retreating from an intra-day high of $1,607.95 hit in the early hours.
The most-active US gold futures contract for August delivery rose 0.4 percent to $1,597.40, but off a high of $1,609.3.
London copper rallied more than 2 percent from a near six-month low hit in the previous session, encouraged by the Spanish bank deal and data showing China's surprisingly strong imports of the industrial metal.
The euro was poised to stage its biggest daily rally against the dollar in almost eight months, and equities jumped too.
"There's a strong rebound in risk appetite after the Spain deal," said Li Ning, an analyst at Shanghai CIFCO Futures. "The surprisingly strong China trade data is also lending support to riskier assets."
Interest in traditional safe havens, such as the dollar and US Treasuries, eased, with the dollar index down 0.8 percent, logging its biggest one-day decline since November 2011.
Money managers raised their net length in US gold and futures by more than 27 percent to 98,426 contracts in the week ended June 5, posting the biggest weekly rise since September 2009.
Speculative net longs in silver also surged, up a third to 6,549 contracts from 4,912 contracts a week earlier -- the lowest level since November 2008.
Spot silver surged nearly 2 percent to an intra-day high of $29, before easing to $28.76.
Platinum group metals also staged impressive gains, with spot platinum up 1.7 percent to $1,446.74 and spot palladium up 2.4 percent at $624.20.
Platinum and palladium are widely used in producing autocatalysts that reduce toxic exhaust.
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