Gold rose more than half a% on Monday, tracking Tokyo futures higher in thin trade, but gains could be limited by a weaker euro after Greece and its private creditors failed to strike a crucial deal to avoid a messy default.
Investors are waiting for euro zone ministers to decide later in the day what terms of a Greek debt restructuring they are ready to accept as part of a second bailout package for Athens.
Gold rose 0.62% to $1,667.99 an ounce by 0237 GMT as gains on Tokyo futures spilled into the cash market. Gold
has risen more than 6% so far this year, but stayed below a lifetime high of around $1,920 hit last September.
Overall trading was slow in Asia because physical markets in China, Singapore, Malaysia and Indonesia were closed for the Lunar New Year break.
"There's a little bit of buying, that's why we see a change in price trend. We've seen physical buying from the general public," said a dealer in Tokyo, referring to private investors.
The most active gold contract on the Tokyo Commodity Exchange, December, added 23 yen a gram to 4,138 yen after rising as high as 4,143 yen a gram, its strongest since mid-December.
US February gold added $3.6 to $1,667.6 an ounce.
The euro started the week in Asia with a negative tone as caution returned after Greece's financing woes.
German Finance Minister Wolfgang Schaeuble said on Sunday the crucial factor in negotiations over a debt-swap plan for Greece was that Athens should by 2020 have a sustainable level of borrowing.
Gold often dances to the tunes of the euro and stocks because of its safe-haven status, which allows speculators to sell the metal for cash to cover losses in other markets, especially during this period of uncertainty in Europe.
"Gold should continue to rebound during 1Q'12, but the gains are unlikely to hail a return to the uptrend of the preceding three years," ANZ said in a report.
"Although the broader profile suggests that gold should push towards $1,800, gold appears to be running out of steam on the test of $1,670."
Silver extended gains and hit a high of $32.42 an ounce, its strongest level since early December. US Mint data showed sales of silver American Eagles totaled 5.3 million ounces on Friday, on pace to surpass its record high of 6.4 million ounces set in January 2011.
Platinum and palladium -- both used in auto catalysts -- tracked gold and equities higher.
Japan's Nikkei share average edged higher on Monday, extending gains for the fifth straight session, although the failure over the weekend of Greece and its private creditors to reach a deal to avoid a default limited its advance.
In the energy market, US crude futures fell to the lowest in more than a month in early Asian trade on Monday on concerns over demand growth.
