Gold traded nearly flat early on Tuesday, supported by safe-haven buying on news Greece will need more debt restructuring, as the metal outperformed equities for a second consecutive day. After seesawing earlier in the session, bullion erased losses as EU officials said Greece is unlikely to be able to pay what it owes and further debt restructuring is likely to be necessary.
Gold's gains are limited by a falling euro as Europe's private sector looked set for a prolonged slump, after surveys showed the downturn that began in the euro zone's small economies has since become entrenched in Germany and France. "Gold is mostly taking its cues from the euro-dollar. Volume is pretty decent, suggesting there are good underlying bids here," said Jonathan Jossen, an independent COMEX gold options floor trader.
A more than 1 percent drop in the S&P and easing grain prices after the previous session's record rally also weighed. Spot gold was up 0.1 percent at $1,578.06 an ounce by 1:14 pm EDT (1714 GMT), moving in a relatively quiet range of less than $20.
US COMEX August gold futures for August delivery were essentially flat at $1,577.40, with trading volume in line with its 30-day average, preliminary Reuters data showed. Little support came from the physical market, with off-take still soft in number one gold consumer India, where demand has been hurt by high prices as a result of near-record low in the rupee. Volumes also remained low on China's Shanghai Gold Exchange. Among other metals, silver edged down 0.4 percent to $26.88 an ounce, while spot platinum was down 0.7 percent at $1,383.24 an ounce and spot palladium dropped 1.4 percent to $558.49 an ounce.
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