Gold tracked equities higher on Tuesday, but was heading for its biggest monthly loss since May, after disappointing corporate earnings prompted investors to sell holdings to cover losses in other markets hurt by global economic uncertainty.
The focus this week will be on Friday's US non-farm payrolls report, which could shed light on the nascent labour market recovery and influence an increasingly tight election between Democratic President Barack Obama and Republican challenger Mitt Romney.
Sandy, one of the biggest storms ever to hit the United States, has had no impact on trading in Asia, but the closure of markets in the United States could curb volume and increase volatility.
Gold hit a low around $1,704 an ounce and was at $1,711.70 by 0713 GMT, up $2.46. It hit an 11-month high above $1,795 in early October after the US Federal Reserve announced its third round of aggressive economic stimulus in September.
"It isn't much of a surprise that it is still moving within this trading band. People are more cautious in view of the US elections and the euro problems," said Brian Lan, managing director of GoldSilver Central Pte Ltd in Singapore.
"Some of the support for this price level, I believe, comes from India, as Diwali is coming up. $1,700 is not a very strong support. Once it's broken, we expect to see the support level at $1,675," said Lan, who pegged resistance at $1,720.
The festive season in main gold consumer India peaks in November with Diwali, the Hindu festival of lights. Weddings also take place at this time, with gold jewellery forming a key part of the dowry daughters receive from their parents.
US gold for December rose $3.90 to $1,712.60 an ounce.
Shares in Asia rose modestly but momentum was curtailed by the powerful storm that will keep US markets shut, while the US dollar slid to an intraday low against the yen after the Bank of Japan unveiled further easing steps.
"A further round of quantitative easing by the BOJ, in addition to possible weakness in the yen, may allow for $10 to $15 an ounce upside to the price today, in our view," Deutsche Bank said in a report.
"Nevertheless, we believe that such support is likely to be ephemeral, with renewed pressure likely as we move through November. We continue to see $1,700 an ounce as an important support level."
The euro was stuck in its recent range, but pressured by political jitters in debt-laden Italy and an uncertain bailout outlook for struggling Spain and Greece.
US economic growth picked up slightly more than expected in the third quarter, data showed on Friday, though global giants Apple <AAPL.O> and Amazon <AMZN.O>, European car maker Renault <RENA.PA> and electronics group Ericsson <ERICb.ST> all posted results that fell short of expectations.
"Whilst last week's Fed meeting took place without new insights or reactions, the presidential elections in the US early in November are moving more and more to the fore. We expect markets to be volatile until then and without clear direction," trading house Heraeus said in a report.
"Should Mitt Romney win, the attitude towards monetary measures is at any rate likely to change: he is not exactly known for being a friend of Bernanke nor the Fed's quantitative easing programme. In the short term, we still expect that falling below $1,700 an ounce would fuel fresh purchases."
Bullish bets on US commodities by hedge funds and other big speculators have fallen to a near 2-1/2-month low, trade data showed on Friday, as oil and gold saw heavy selling for a second straight week.
Uncertainty over global economic recovery and questions on the future of US monetary policy, which has been ultra-loose under Fed Chairman Ben Bernanke, was weighing on gold's appeal as an inflation hedge.
