NEW YORK/LONDON: Gold dropped on Tuesday as the dollar strengthened versus the euro on renewed fears of credit downgrades in major European economies and uncertainty over Greece's bailout.
Bullion slid with the euro after Moody's warned it may cut its triple-A credit ratings of France, Britain and Austria. The ratings agency cited the euro zone debt crisis.
Weaker-than-expected January US retail sales data also cut investors' risk appetite.
Gold has slipped in February after rising 11 percent in January, when it was boosted by the Federal Reserve's nero-zero interest rate outlook for nearly three more years. Analysts expect the precious metal to trade in a range for the forseeable future.
"Any rallies will be capped against the overall potential of an economic slowdown, absent truly new actions by the European governments," Frank McGhee, head precious metals trader at Integrated Brokerage Services LLC.
"I'm not surprised to see gold working in a trading range in next couple of weeks," he said.
Spot gold was down 0.2 percent at $1,719.36 an ounce by 11:06 a.m. EST (1606 GMT), having touched an intraday low of $1,711.70 earlier in the day.
US gold futures for April delivery were down $3.40 at $1,721.50.
While the Moody's news rattled the markets, focus remained on Greece, which has acknowledged it still has much to do to persuade the European Union and International Monetary Fund to save it from a chaotic default.
Euro zone finance ministers have asked the Greek government for details of how it will fill a massive gap in its plan for extra savings this year ahead of a key meeting on Wednesday.
Gold remains more sensitive to moves in the euro in the short term than to rising risk aversion. The euro zone debt crisis has been a positive driver of prices last year.
Technical selling weighed on gold again when it failed to rise above Monday's high around $1,730 an ounce. Last week, gold encountered heavy technical selling around $1,750 an ounce, the highs set in early December.
"Gold had a good run-up but it's banged its head against resistance around $1,760.00," Saxo Bank senior manager Ole Hansen said.
ASIAN PHYSICAL DEMAND SOFT
On the physical side of the market, gold demand in major consumer India was soft on Tuesday as traders bet prices would continue to fall, after briefly ticking higher.
In number two gold market China, the world's first yuan-denominated gold exchange-traded fund made a weak debut on the Hong Kong stock exchange, but analysts said demand would probably pick up as investors become more familiar with it.
Earlier, an official from the Shanghai Gold Exchange said it planned to launch over-the-counter gold trading and was in talks with the China Foreign Exchange Trade System to conduct these trades via the interbank market.
Among other precious metals, silver was down 0.3 percent at $33.60 an ounce. Spot platinum was down 1.1 percent at $1,626.50 an ounce, while spot palladium was down 1.5 percent at $684.72 an ounce.
Platinum prices fell after a recent rally on the back of supply outages in major producer South Africa.
The platinum-to-palladium ratio - the number of palladium ounces needed to buy an ounce of platinum - held near its highest since early December on Tuesday at 2.4, suggesting palladium has underperformed platinum.
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