Thursday, buoyed by a euro strengthened by hopes Greece was moving closer to a bailout deal, and surprisingly strong China inflation also supported sentiment.
Greek political leaders have agreed on all points of a bailout package except one — pension cuts — and officials said discussions with international lenders would continue so a deal could be concluded before a meeting of euro zone finance ministers on Thursday.
Bailing out Greece will boost the euro against the dollar for a while, making dollar-denominated assets such as gold cheaper and more attractive, traders said. This would help gold maintain its appeal even if the Greek deal diminishes its safe haven status.
“Greece seems to be closer to a concrete deal, which weighs on the dollar and helps gold,” said Ronald Leung, a physical dealer at Lee Cheong Gold Dealers in Hong Kong.
Gold edged up 0.1 percent to $1,735.69 an ounce by 0803 GMT, recovering from an intra-day low of $1,725.49. U.S.
Gold inched up 0.4 percent to $1,738.60. Gold was also boosted by a stronger-than-expected inflation reading out of China, which investors said may mean the central bank will hold off on aggressive monetary easing for now. But many economists expect inflation to ease February onwards, leaving China’s policy of targeted monetary and fiscal easing intact.