SINGAPORE: Gold traded in a tight range around $1,750 an ounce on Tuesday, as traders moved to the sidelines after initially pushing up bullion by almost $3 following a deal among Greece's international lenders to cut the country's long-term debt.
Euro zone finance ministers and the International Monetary Fund reached an agreement on reducing Greece's debt in a breakthrough to release urgently needed loans to keep the near-bankrupt Greek economy afloat.
The euro rose to its highest in nearly a month earlier in the day, before erasing much of the rise, while the dollar edged lower against a basket of currencies, supporting sentiment in dollar-priced commodities.
"There is a lot of apathy towards the Europe situation right now," said a Hong Kong-based trader, adding that many investors have chosen to sit on the sidelines as the month-end approaches, and some of them are closing books for the year.
But expectations for continuous monetary easing from central banks around the world was boosting sentiment in gold, he said.
"The big picture is still driving people to precious metals, because they think the current problem is either not addressed, or won't be realistically solved other than by the current tactic, which is to have central banks and finance ministries working together to stimulate economies," he added.
Uncertainty around the US fiscal problems also helped support gold, as lawmakers resumed talks to avoid the "fiscal cliff" -- a package of $600 billion tax hikes and spending cuts that would kick off in early 2013 if they did not reach an agreement.
Spot gold traded nearly flat at $1,749.41 an ounce by 0714 GMT, after climbing to $1,751.40 earlier in the session. US gold was also little changed, at $1,749.80.
Technical analysis suggested that signals will be neutral so long as spot gold remains in a range of $1,746-$1,755 an ounce, said Reuters market analyst Wang Tao.
COMEX GOLD OPTION EXPIRY
Investors are also eyeing the expiry of COMEX gold December option later in the day. The strike level at $1,750 has attracted high open interest.
At the $1,750 level, open interest on calls was at 8,191 contracts and on puts 7,773 contracts, Reuters data showed.
"Over the past few days we have seen a lot of gravitational pull around that strike," said the Hong Kong-based trader.
Hedge funds and money managers raised their bullish bets on US gold futures and options to a four-week high of 148,630 lots in the week ended Nov. 20, said the US Commodity Futures Trading Commission.
Activities in Asia's physical gold market remained slow after a small bout of scrap selling on Monday, dealers said.
"The market is comatose," said a Singapore-based dealer, "People are waiting for higher prices to sell scrap."
Spot silver rose to $34.26, its highest since Oct. 11, before easing to $34.16.
Net length in US silver rose the a one-month high of 33,317 contracts, the CFTC said.
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