Gold held steady and silver extended gains from the previous week on Monday, buoyed by a weaker dollar and the ongoing debt crisis in the euro zone, while a hike in margins by the Shanghai Gold Exchange kept sentiment in check.

The Shanghai bourse plans to temporarily increase margins on gold and silver forward contracts on settlement at June 2 and trading limits on June 3, before the market closes for a public holiday on June 6.

"The margin hike in Shanghai Gold Exchange is adding pressure to prices," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong. "But precious metals are holding well, as the euro remains firm and oil prices are staying above $100."

The euro held on to the bulk of the gains it made on Friday, and the dollar hovered just above its lowest in more the two weeks.

The euro was supported after Greek central bank chief George Provopoulos was quoted as saying on Friday that the country will repay its debts in full without restructuring if it sticks to a fiscal austerity plan.

Still, the crisis remains in focus as angry Greeks took to the streets of Athens denouncing the government and the IMF on Sunday, amid talks that Greece may restructure its debt.

European Union and IMF officials are expected to deliver their verdict this week on Greece's faltering drive to bring its budget deficit under control.

Fung said $1,500 should offer strong support to gold, and prices are likely to reach $1,600 by the end of the year as investors continue to buy bullion to protect themselves against economic uncertainties.

"The speculators are coming back, mainly driven by the European debt crisis," said a Singapore-based trader. "Gold is likely to slowly move up during the summer unless we see big headlines, such as the US raising interest rates earlier than expected."

Sluggish consumer spending and a seven-month low pending home sales in April stoke worries that the US economic recovery was losing momentum at beginning of the second quarter.

Spot gold was little changed at $1,535.60 an ounce by 0357 GMT, after rising 1.8 percent in the previous session.

US gold was nearly flat at $1,535.90.

The US and UK markets are closed on Monday on public holidays.

Technical analysis suggested that spot gold may retrace to $1,513, said Reuters market analyst Wang Tao.

Spot silver rose 0.7 percent to $1,535.60, extending last week's 8.1 percent rise. US silver gained 0.8 percent to $38.17.

Shanghai silver forward was trading at 8,334 yuan a kilogram, equivalent to about $39.9 an ounce.

Enthusiasm for silver investment in China, the world's second biggest gold consumer, has expanded rapidly over the past few months, pushing the trading volume for Shanghai silver forward to 73 million ounces on May, more than three thousand times the volume at the start of 2011. – Reuters