Gold prices slipped 1 percent in Europe on Wednesday as the dollar rose against the euro after supportive comments from Federal Reserve chairman Ben Bernanke, and amid uncertainty over a possible bailout of Greece. The US currency extended gains after Bernanke said he could begin pulling back stimulus from the economy by first removing cash from the financial system.
Analysts described his remarks as "hawkish," suggesting the US economy is on a stable path to recovery. Spot gold was bid at $1,065.25 an ounce at 1508 GMT, against $1,076.95 late in New York on Tuesday. US gold futures for April delivery on the COMEX division of the New York Mercantile Exchange fell $10.90 to $1,065.80 an ounce.
The precious metal rose as high as $1,082.10 in earlier trade as the prospects of an imminent rescue package for Greece lifted the euro. "Gold is tracking the euro/dollar tick by tick," said Deutsche Bank trader Michael Blumenroth. "You just have to make up your mind about currency moves, and then react to that."
Gold rose along with the euro earlier on Wednesday after German government coalition sources said bilateral financial aid could be provided for Greece. Among other commodities, oil gave up dollar-related gains made in early trade to slip back below $74 a barrel. Gold tends to track crude prices, as the metal can be bought as a hedge against oil-led inflation.
On the physical side of the gold market, Indian demand for the precious metal tailed off as prices recovered, while holdings of the SPDR Gold Trust exchange-traded fund were unchanged.
Among other precious metals, silver was at $15.19 an ounce against $15.41, tracking losses in gold. Holdings of the world's largest silver-backed ETF, New York's iShares Silver Trust, have risen nearly 46 tonnes this week, suggesting investment demand for the precious metal is strong.
Elsewhere platinum was at $1,491 an ounce against $1,502, and palladium at $411 against $415. "Key near-term support is seen from seven-month trendlines in palladium and platinum at $386 and $1,468, respectively," Barclays Capital said in a note.