Gold edged down on Tuesday as equities gave up some of the gains driven by enthusiasm over a weekend victory for pro-bailout parties in Greek elections, and investors shifted their focus to a policy meeting by the US Federal Reserve.
Investors are looking for hints for another round of quantitative easing (QE) in the United States when the Federal Open Market Committee releases a policy statement at the end of its two-day meeting on Wednesday.
Fundamentals
Spot gold eased 75 cents to $1,627.19 an ounce by 5:30 AM, having hit an intraday low of $1,625.54. On Monday, bullion posted its seventh day of gains on lingering worries about the debt crisis in Europe.
US gold for August delivery added $1.50 an ounce to $1,628.50 an ounce.
World leaders pressured Europe on Monday to take ambitious new steps to resolve its debt crisis after a victory for pro-bailout parties in a Greek election failed to calm markets or ease worries that wider turmoil could derail the global economy.
Given a US outlook that is weak but not recessionary, the Fed meeting on Wednesday could opt for extending "Operation Twist", its effort to drive down long-term borrowing costs by selling short-term securities to buy longer-term ones, economists said.
Market news
The Nikkei eased 0.4 percent to 8,689.46, losing some of its hefty gains from the previous session as initial enthusiasm over the victory for pro-bailout parties in Greece gave way to persistent concerns over Spain and its banks.
The euro on Tuesday held most of its losses from the previous session after the optimism over Greece gave way to the worry over Spain, pushing its borrowing costs to levels seen as unsustainable.
Crude futures continued to slide on Tuesday as an increase in bad Spanish loans fuelled fears that Europe's debt crisis was taking a turn for the worse, further crimping global oil demand.
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