Spot gold has been moving in a tight range of less than $20 above $1,600 for three days after the new year euphoria quickly faded and worries about the euro zone debt crisis resurfaced. "The sentiment is neutral in the market," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong. "People are waiting on the side waiting for developments out of the euro zone." After Germany and France struck a gloomy tone on Greece, market participants are eyeing bond auctions by Italy and Spain later this week, seen as a test on the willingness of investors to plough more money into the debt-laden euro zone nations. The single currency held steady and Asian shares gained, while worries about the euro zone debt crisis kept investors cautious about taking riskier positions. Spot gold edged up 0.3 percent to $1,615.09 an ounce by 0300 GMT, after dropping for two sessions straight. US gold gained half a percent to $1,616.50. Technical analysis suggested that spot gold is trapped between $1,604 and $1,623 an ounce during the day, said Reuters market analyst Wang Tao. The annual rebalancing of commodity indices, including DJ-UBS and S&P GSCI, was slated to take place this week and could put some pressure on gold, one of the outperformers of the commodity complex in 2011, analysts said. ASIA PHYSICAL DEMAND LUKEWARM Physical demand ahead of the Lunar New Year, which falls on Jan. 23 this year, has so far been sluggish, said bullion dealers. "There is some buying, but we haven't seen a substantial pickup in physical demand before the Lunar New Year," said Dick Poon, manager of precious metals at Heraeus in Hong Kong. "People are worried about the euro zone, and concerned if China can maintain its growth." As physical supply improves after refineries returned from the new year break, premiums on gold bars in Hong Kong eased to $1-$1.50 an ounce above spot prices, from $1.50-$2.50 last week, Poon added. Holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, stood unchanged for the tenth straight session at 1,254.57 tonnes on Jan. 9. Spot palladium rebounded nearly 1 percent to $619.23, after sinking to a two-week low of $604.99 in the previous session.