Spot gold posted its biggest one-day rally in a month on Friday after euro zone leaders agreed to bend their aid rules to shore up banks and bring down the borrowing costs of countries like Italy and Spain, in a sign that the bloc is adopting a more flexible approach to solving its debt crisis.

But the euphoria ebbed when markets opened on the first trading day of the quarter, with the euro and oil sliding and bullion retreating, as investors question to what extent the deal will help tackle the crisis.

"These were small steps and the time frame to get some of these things done is long, so I wouldn't be surprised if the market takes a pause," said Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong.

Spot gold edged down 0.3 percent to $1,592.51 an ounce by 0343 GMT. The precious metal posted a monthly gain of more than 2 percent in June, its first in five months.

US gold futures contract for August delivery lost 0.7 percent to $1,593.20.

Investors are eyeing the manufacturing surveys for euro zone nations later in the day, after recent downbeat manufacturing data from China and Japan heightened concerns about the health of the global economy. The US consumer confidence fell to a six-month low in June.

The uncertainty around Europe will continue to weigh on markets, but central banks and policymakers are likely to take more accommodative stance in the second half of the year to help the economic recovery, Friesen said.

Economic and political turmoil usually drive investors to seek safety in gold, but bullion has largely moved in tandem with riskier assets since late last year due to the tight credit conditions caused by the euro zone debt crisis.

So long as the uncertainty in Europe remains, gold may remain under pressure despite the expected easing from central banks, Friesen added.

"Rate cuts could spark a rally in gold, but if there is still uncertainty, credit conditions could remain tight which would hold gold down."

Money managers slashed their net long positions in US gold futures and options by 20 percent in the week ended June 26, the first decline in five weeks.

"Medium-term pressure on gold has not subsided completely and gold can't hold on to the $1,600 level," said a Tokyo-based trader.

But holdings of gold-backed exchange-traded funds edged up last week, showing unflinching interest in gold from some investors.