Gold prices held just below $1,500 an ounce in Europe on Tuesday, kept in a narrow range as the dollar rose versus the euro, offsetting the positive impact of rising risk aversion fuelled by uncertainty over plans to roll over Greek debt.

Spot gold was bid at $1,497.45 an ounce at 0923 GMT, against $1,495.54 late in New York on Monday. U.S. gold futures for August delivery GCv1 rose $15.90 an ounce to $1,498.40.
The euro looked set to snap a six-day winning streak on Tuesday, as the dollar rose broadly on concerns over the Chinese economy and speculation that U.S. companies will repatriate dollars earned overseas.
Chinese media reports about a possible rate rise in China, as well as a Moody’s report saying the scale of problem loans at local governments in China may be much bigger than previously thought, weighed on risk appetite.
Meanwhile, the premium investors demand to hold Spanish and Italian debt crept up and the cost of insuring peripheral debt against default rose on weak economic data and persistent worries over the impact of a Greek debt rollover.
“Uncertainty with respect to the Greece aid package is helping bullion to cling on to the $1,500 zone,” said Pradeep Unni, senior analyst at Richcomm Global Services.
“Technical charts however suggested lack of momentum in bullion. Isolated demand from the physical markets is unlikely to provide considerable support. In the near term, there seems to be a greater possibility of bullion being dragged lower to the near-term support of $1,460 or lower.”
Worries over mounting debt levels in euro zone economies like Greece, Ireland and Portugal were a key factor driving gold to record highs above $1,575 an ounce in May. Relief after Greece secured a 12 billion euro loan to avert default helped allay some of those concerns last week.
But they persist, with Standard & Poor’s warning on Monday it would treat a rollover of privately held Greek debt now being discussed as a selective default. Below forecast euro zone PMI data boosted risk-averse sentiment on Tuesday.
-----------------------Asian gold buying picks up
Asian gold demand firmed after prices slid below $1,500 an ounce, with buying picking up in Thailand after Sunday’s election and premiums rising in Singapore. Indian and Chinese buyers -- the world’s top gold consumers -- were also seen in the market, though seasonal factors muted buying.
With physical demand set to remain lacklustre during the seasonally quiet summer months, and investors sill digesting moves to shore up the troubled euro zone and the end of U.S. monetary easing, gold is set to stay in consolidation mode.
“Gold will need to search for new sources of inspiration to move higher, in our view, as the markets contemplate a world without quantitative easing,” said Deutsche Bank in a note.
“However, we expect a weak U.S. dollar, negative real interest rates and ongoing central bank diversification into gold will sustain a constructive outlook for the sector.”
Data released by the International Monetary Fund showed on Tuesday that Greece and Tajikistan marginally increased their gold reserves by 0.03 tons and 0.05 tons respectively in May, while Mexico sold 0.19 tons.
Among other precious metals, silver was bid at $34.15 an ounce against $34.08, spot platinum was bid at $1,718.24 an ounce versus $1,718.55, and spot palladium was at $757.97 an ounce against $757.45.
The world’s biggest carmaker, Toyota , said its Chinese auto sales fell by 2.4 percent in June from a year earlier. General Motors and its China joint ventures saw a 9.9 percent rise in sales in the same period, it said.
The health of the car sector is a key driver for platinum group metals, which are used in autocatalyst manufacturing.
“The PGMs did well to virtually shrug off poorer-than-expected June U.S. auto sales of 11.4 million units, well below consensus of 11.9 million units and lower than May’s 11.8 million,” said UBS in a note.
“The decline was driven by continued inventory shortages and a recently implemented California sales tax break, effective July 1. Our auto analysts deem the June result to be a temporary effect of Japan’s earthquake and note that overall fundamentals remain strong for the full year.”
(Source: Reuters)
Highlight: The euro looked set to snap a six-day winning streak on Tuesday, as the dollar rose broadly on concerns over the Chinese economy and speculation that U.S. companies will repatriate dollars earned overseas.