LONDON Gold edged lower, trading at around $1,724 an ounce on Wednesday, with investors focused on efforts to agree financial aid for Greece, truce talks over Gaza and discussions on how to avert a fiscal crisis in the United States.
Spot gold slipped 0.25 percent to $1,723.71 an ounce by 1506 GMT. U.S. gold was up 0.03 percent at $1,724.10.
Gold prices had eased as the dollar firmed after Greece's lenders failed to strike a debt deal for the country, and later failed to react to U.S. jobless claims data, which came in as expected.
International lenders failed for the second week to reach a deal to release emergency aid for Greece and will try again next Monday, but Germany signalled that significant divisions remain.
"Gold is continuing to consolidate in its current range between $1,720 and $1,735-1,736. Buying would come in if gold goes below $1,720," Alexander Zumpfe, a trader at precious metals house Heraeus, said.
Losses in bullion were checked by expectations that U.S. lawmakers would reach a deal to avert automatic tax hikes and spending cuts in early 2013, which could otherwise trigger another recession.
"This optimism is about avoiding recession, which would weigh on gold prices because of concerns over deflation," said Bayram Dincer, analyst with LGT Capital Management.
Federal Reserve Chairman Ben Bernanke said on Tuesday that 2013 could be a "very good year" for the U.S. economy if politicians can strike a quick deal to avoid the so-called fiscal cliff.
The conflict in the Middle East helped to support the gold price. A failure to reach a cease-fire would further support gold's safe-haven appeal, analysts said.
Gold can sometimes be viewed as a safe haven investment, especially in times of great uncertainty.
U.S. Secretary of State Hillary Clinton on Wednesday pursued a Gaza truce, with Israel and Hamas still at odds over terms, as Israeli air strikes shook the enclave and a bomb exploded on a Tel Aviv bus.
CENTRAL BANK GOLD RESERVES
News that Brazil, Kazakhstan and Turkey had raised their gold holdings also supported gold prices.
Brazil raised its gold holdings by 17.170 tonnes in October, data from the International Monetary Fund showed on Wednesday, bringing its bullion reserves to 52.518 tonnes.
"This is a chunky purchase by a central bank, and the gold market will likely sit up and pay attention to today's news, not just because of its size but because this is a central bank that has not been active in the market for some time," UBS said in a note to clients.
Traders and analysts expect gold to remain rangebound as some traders unwind long positions before Thanksgiving, but say the longer-term outlook for gold remains positive due to expectations of a continuing ultra-loose monetary environment in the United States.
Spot silver eased 0.48 percent to $33.00 an ounce.
Platinum edged up 0.13 percent to $1,571.25, while palladium was last at $638.5, up 0.83 percent.
(Editing by Veronica Brown and Jason Neely)
Trending On Reuters
InterGlobe Aviation Ltd, which owns the country's biggest airline IndiGo, on Tuesday filed a draft prospectus for an initial public offering (IPO) to list on the domestic stock market and cash in on a booming air travel market. Full Article
India's infrastructure output rebounds in May, posts fastest growth in 6 months. Full Article