Indian gold futures are likely to retreat further from last week's gains, weighed by expectations of a firmer rupee, which regained some ground on Monday after hitting a record low last week.
At 0916 GMT, the most-active gold for August delivery on the Multi Commodity Exchange (MCX) was trading 0.43 percent lower at 29,845 rupees per 10 grams, after hitting a low of 29,720 rupees earlier. The contract shed 2.1 percent in the previous week.
"There will be a broad-based consolidation with bias on the lower side due to a correction in rupee...," Harish Galipelli, vice-president of JRG Wealth Management, said. "We are recommending to stay short."
The rupee rallied on Monday on expectations of measures from the government to check its slide. The rupee plays an important role in determining the landed cost of the dollar-quoted yellow metal.
Investors will also be watching the EU summit for price direction. Having once hoped this week's summit could be a turning point for the EU debt crisis, financial markets seemed to have toned down expectations of concrete progress.
Traders in India would also eye the progress of monsoon rains to gauge demand in the coming months.
India's monsoon rains are still expected to be average in 2012, allaying concerns over farm output triggered by sparse rainfall in the last few weeks.
Rural areas, which contribute to over 60 percent of gold demand, are dependent on monsoon rains to spur agricultural production and disposable incomes.
Silver for July delivery on the MCX was 1.01 percent lower at 52,420 rupees per kg.
Selling is advised in silver at 52,800 rupees, for a target 51,200/50,000 rupees, with a stop loss above 53,500, said Galipelli.