Gold pares gains on technical selling, Greece eyedPosted on Tuesday, February 14, 2012 - 02:16 am
Gold and the euro, however, pared gains later as markets focused on a key Wednesday meeting in which euro zone finance ministers will decide whether to agree to the 130 billion euro ($171.8 billion) bailout.
The metal's rally also began to fizzle when it failed to rise above the previous session's high above $1,730 an ounce. Last week, gold encountered heavy technical selling around $1,750 an ounce, the highs set in early December.
"Gold is currently testing its upward trendline. Until it rises above the middle of its bullish double-bottom pattern at $1,804 an ounce, there remains significant overhead resistance," said Adam Sarhan, CEO of Sarhan Capital.
Spot gold was up 0.2 percent at $1,722.89 an ounce as of 1:33 p.m. EST (1833 GMT), having risen as high as $1,733.
U.S. gold futures for April delivery inched up 20 cents an ounce at $1,727.50 in below-average trading volume.
Jonathan Jossen, a COMEX gold options floor trader, said gold's pullback from its initial rally was technically driven as selling accelerated after the metal failed to breach Friday's high at around $1,734 an ounce.
The euro inched up in light volume after giving up early gains. Analysts said further hurdles ahead could keep increases short-lived.
"While the Greek parliament has ratified the austerity measures, some uncertainty still remains ... regarding the demand for a clear commitment that all the members of the coalition government stick to the agreement," said Anne-Laure Tremblay, an analyst at BNP Paribas.
Although gold prices have rallied more than 10 percent this year, they have tended to react negatively in the short term to signs of more stress in the euro zone, tracking losses in the euro and stocks.
Gold has made significant gains this year on the back of loose monetary policy in the United States and elsewhere, which cuts the opportunity cost of holding the precious metal.
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