Gold held steady on Tuesday, as investors remained focused on developments in Greece’s struggle with its debt crisis after Athens delayed its decision on accepting the terms of a new bailout.
Bullion fell to a 1-1/2-week low in the previous session, after Greece’s continued delay in tackling the debt crisis hit the euro and buoyed the dollar, as sentiment on the single currency weakened with rising concern of a chaotic Greek default.
Most markets were subdued, as investors remained split over whether the wrangling over Greece would eventually be resolved or trigger contagion across other vulnerable euro zone countries.
Spot gold edged up 0.1 per cent to $1,721.13 an ounce by 0311 GMT, after touching a 1-1/2-week low of $1,711.29 in the previous session. US gold was little changed at $1,724.30.
Although gold prices fell for two consecutive sessions, analysts and traders said gold’s long-term bullish trend remains intact, supported by safe-haven demand on a murky global economic outlook as well as hopes of monetary easing in the world’s key economies.
“What we saw was a technical reaction after a solid run, after being in overbought territory, which coincided with the better-than-expected US non-farm payrolls number,” said Dominic Schnider, head of commodity research at UBS Wealth Management.
The surprisingly good US jobs data knocked spot gold down nearly two per cent on Friday, as it diminished hopes for fresh quantitative easing any time soon, but the ultra-loose monetary policy of the US Federal Reserve will help boost gold in the long run, Schnider and other analysts said.
A key support level for gold would be $1,680, said Schnider.
Technical analysis suggested that spot gold could fall to $1,696 during the day, said Reuters market analyst Wang Tao.
Major bullion bank HSBC said it was keeping its 2012 average gold forecast at $1,850 an ounce due to accommodative global monetary policies and investor jitters about financial markets.