SINGAPORE: Gold inched up on Tuesday ahead of a Group of Seven conference call that will attempt to discuss measures to contain the euro zone debt crisis that has threatened to drag the global economy into a recession.
The euro edged higher, as bears trimmed shorts in case policymakers decided to take decisive moves to tackle the crisis, now in its third year.
Bullion rose more than 3 percent last week, when it broke its trend of trading in sync with riskier assets, but it slipped in New York on Monday after declines in US equities forced speculators to cash in the metal to cover losses.
"The market sentiment has turned a bit more bullish since we broke above the key $1,600 level on Friday, as investors may favour gold as a safe haven again after the bad US data last week," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.
Fung said gold has found a solid floor at the $1,530 level, and could look to test $1,680, or even $1,700.
Spot gold gained $1.04 to $1,619.79 an ounce by 0335 GMT. US gold futures for August delivery gained nearly half a percent to $1,621.60 an ounce.
A revival of investor interest in gold was reflected in the holdings of gold-backed exchange-traded funds, which rose to 69.7 million ounces by June 3 in a third straight day of gains, up from a four-month low of 69.4 million ounces hit in late May.
The holdings hit a record high of 70.89 million ounces in mid-March.
"The physical market remains fragile but ETP holdings have stabilised and remain close to record highs," said Barclays Capital in a research note.
"But given the macro environment, we remain positive on gold. How gold responds to key events this month, such as the Greek election and the FOMC (Federal Open Market Committee) meeting, will be pivotal in the metal reinstating its safe-haven appeal."
US Treasuries and German Bund prices fell on Monday, as investors cashed in profits after their yields declined to record lows last Friday when the weak US employment data prompted a wave of safe haven bids into low-risk assets.
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