Gold edged higher on Wednesday after the Greek parliament approved a five-year austerity plan, which supported the euro and boosted other risk-linked assets.
Gold usually gains in periods of greater investor aversion, but the Greek debt crisis, and its impact on the euro, have caused bullion to act less as a safe-haven asset and more as a commodity.
After the Greek vote, the euro fell before paring losses, as investors considered the fiscal outlook for the country ahead of Thursday's parliamentary vote on an implementation law enabling individual budget measures.
Spot gold was last up 0.3% at USD 1,505.30 an ounce by 1450 GMT, having risen by as much as 0.63% to an intraday peak of USD 1,509.96, countering losses seen earlier in the week that took the price below USD 1,500, while COMEX gold rose 0.4% to USD 1,505.50 .
"A stronger euro is supportive but more importantly, I think we are consolidating here. We have had substantial profit-taking and I think the downside is limited," said VTB Capital analyst Andrey Kryuchenkov.
"For gold to rally beyond the late-April, early-May highs you will need to see risk aversion spiking out of proportion. We all know what is happening in Greece and unless they default, gold will not decouple from the euro and the broader equity markets and will trade like any other risk asset ."
Gold's correlation to the stock market has been positive for almost three months, having peaked in mid-May at six-month highs, and has been strengthening for the past week, meaning it is more likely to move in lockstep with stocks, which can suffer from bouts of investor risk aversion.
Markets wary of Greece
Market activity has been thin as a result of a combination of sluggish seasonal demand and a lack of market-moving economic factors.
"There are still reasons to buy gold, but just not any new reason for now," said Yingxi Yu, an analyst at Barclays Capital.
"Market participants are generally positive on gold, but it is a question whether now is the right time to enter the market given the volatility in risky assets such as equities and oil in particular."
The 19-commodity Reuters-Jefferies CRB index rose 1.7% on Tuesday, its biggest daily rise in nearly six weeks, as investors bet that Greece will approve the austerity plan and avoid defaulting its debt.
HSBC said in a note that the Greek debt crisis has prompted some flight-to-quality flows, but these have been directed more into other perceived safe-haven assets such as the Swiss franc and U.S. Treasuries , rather than gold.
"The gold market may not have dropped enough to invite substantial emerging market and safe haven buying to emerge. Longer term, we remain bullish. The strength of the CHF shows there is still plenty of nervous safe haven buying that could easily shift into gold," said HSBC analyst James Steel.
Judging by the inflows into exchange-traded funds backed by physical metal, investors have been buying gold, pushing up global ETF holdings of bullion by nearly half a million ounces in the last two weeks, according to Reuters data.
So far this year, ETF holdings of gold are down by about 0.2% or 185,000 ounces, in contrast to last year, when the burgeoning eurozone debt crisis fed strong demand for gold ETFs.
Analysts said that in spite of the current uncertainty, the longer-term outlook for gold prices remained positive, as low interest rates in the United States, uncertainties in eurozone's fiscal situation, and high inflation in major emerging economies are likely to retain its appeal.
Platinum group metals rose for a second day, following strength in global equities, which were lifted by optimism over a positive outcome for the Greek austerity vote.
Concerns over power supply in South Africa, the world's top producer of platinum, also helped support prices, which fell to three-month lows earlier in the week.
The National Union of Mineworkers in South Africa on Tuesday called its members for a strike at power firm Eskom, which supplies 95% of the country's power.
Spot platinum was last up 1.5% at USD 1,7 14.50 an ounce, while palladium rose 0.5% to USD 7 39.72 .
Platinum and palladium have wide industrial applications, and are key ingredients in autocatalysts.
Also read:Greek parliament approves austerity law with 155 votes
