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A looming US rate hike has dimmed the appeal of non-interest bearing assets as gold, which may explain the fall in the metal from a recent seven-week high even as global equities tumbled on fears over a slowing Chinese economy.
Gold has been stuck in narrow ranges this week ahead of the conclusion of the Fed's policy meeting later in the day. Policymakers are expected to send more signals to the market that a US interest rate increase is certain this year as the economy recovers.
Front-month US crude futures were trading at USD 52.79 per barrel at 0036 GMT, up 46 cents from their last settlement. The slight gain followed an 8 percent fall between Monday and Tuesday that pulled the contract down to levels last seen in April.
Without a deal, Greece risks default or bankruptcy in weeks, a possibility that has supported gold prices to an extent. Athens missed a self-imposed Sunday deadline for reaching an agreement to unlock aid, sources close to the talks said.
Gold was trading close to a three-month high on Monday, buoyed by a weaker dollar and more soft US data that triggered hopes the Federal Reserve would not hike interest rates soon.
Spot gold had eased 0.2 percent to USD 1,255.24 an ounce by 0323 GMT. Gold rose nearly USD 20 an ounce on Wednesday after a weak US jobs report but pared most of the gains on other strong numbers.
Ben Bernanke's statement reversal on Fed continuing to remain accomodative, along with the Japanese elections and some noise from China about a possible stimulus push has given gold a reason to rally
Record gold prices may be heading for a correction of about 8% next month, but the safe-haven metal may also rally to USD 2,400 an ounce next year as investors seek refuge amid global economic turmoil, a global head at INTL FCStone on Saturday.
