Gold rose above $1,500 an ounce on Tuesday, poised to snap a three-session losing streak as hopes that Greece would pass unpopular austerity measures, which boosted the euro and fuelled investor risk appetite on commodities across the board.
Gold has recently come under pressure from risk-averse selling and technical weakness. Worries of economic slowdown and fears over a default of debt-laden Greece also dent gold's inflation hedge appeal. Despite Tuesday's gain, the metal was down nearly 4 percent in the past four days.
"There are days on which gold benefits because the risk-on trade comes back into vogue and it doesn't matter what commodity you look at, they're all going up," said Natixis commodities strategist Nic Brown. The Reuters/Jefferies CRB index rose around 2 percent, with crude oil jumping nearly 3 percent.
Spot gold was up 0.2 percent at $1,499.11 an ounce by 1:52 pm EDT (1752 GMT). US gold futures for August delivery settled up $3.80 an ounce at $1,500.20, after trading between $1,495.50 and $1,507. The euro has suffered in recent weeks from worries Greece's debt crisis could destabilise the eurozone.
If these concerns are allayed the euro could recover, benefiting gold despite the fact that it would lose some of its safe-haven bid. "If there is any slight marginal improvement in Europe, and if the European Central Bank is going to be starting to raise rates in September and December, you might have a currency story that could be quite positive for gold," said Michael Lewis, head of commodities research at Deutsche Bank.
Greece's parliament is set to vote on Wednesday and Thursday on a new austerity program required for Athens to receive more aid from the European Union and International Monetary Fund. An agreement by heavily exposed French banks to roll over Greek debt and talk that European Union officials are working on a contingency plan if Greece's parliament rejects an austerity package lifted hopes its debt crisis may be contained. Among other precious metals, silver was up 0.4 percent at $33.67 an ounce, while platinum rose 1 percent to $1,687.75 an ounce and palladium was up 1.2 percent at $733.96.
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