SINGAPORE: Gold held near a one-month high on Wednesday but faces a strong resistance at $1,700 an ounce, as it struggles to attract fresh buying from investors who opted for riskier assets against the backdrop of a global economic recovery.
The US debt ceiling talks, seen as a potential threat to the recovery of the world's top economy, have shown positive signs, as the House of Representatives plans to pass a bill on a nearly four-month extension of the borrowing limit.
A rosier global economic outlook based on recent upbeat data from the United States, China and even Europe, has triggered rallies in equities and precious metals with industrial applications, including silver, platinum and palladium, putting gold in the shadow.
"It looks like the debt ceiling problem is solved for the time being, and investors would pour money into the stock market rather than gold," said Ronald Leung, a gold dealer at Lee Cheong Gold Dealers in Hong Kong.
The Standard & Poor's 500 index hit a five-year high in the previous session, up 4.6 percent so far this month, outperforming the gain of 1 percent in gold -- the worst performer in the precious metals complex.
Spot gold was little changed at $1,692.60 an ounce by 0328 GMT. It hit a one-month high of $1,695.76 in the previous session after the Bank of Japan announced bold stimulus measures in an attempt to revive the anaemic economy.
US gold traded nearly flat at $1,692.60.
Technical analysis suggested spot gold may rise to $1,706 an ounce during the day, as an upward wave c starting from the Jan. 11 low of $1,653.44 has not been completed, said Reuters market analyst Wang Tao.
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