The US "fiscal cliff" -- tax hikes and spending cuts of nearly $600 billion that will kick in early next year if Congress fails to avert them -- is looming as a major concern in financial markets as it threatens to push the world's top economy back into recession.

Gold's safe haven status would shine in the case of failed talks and political paralysis, while success in avoiding the fiscal disaster may dampen sentiment in gold, analysts said.

"If we don't see an agreement and there is a gridlock, it will burden the dollar and benefit gold," said Dominic Schnider, an analyst at UBS Wealth Management in Singapore.

The more probable result would be a compromise that did not completely solve the fiscal problem, which would also benefit gold, since the Federal Reserve would have to provide more stimulus to help the economy, he added.

"It is not going to be easy, and it will likely motivate renewed interest in demand for gold," Schnider said.

Spot gold edged down 0.1 percent to $1,713.19 an ounce by 0750 GMT, on track for a weekly loss of 1 percent, after prices climbed more than 3 percent the prior week.

US gold was little changed at $1,713.60.

Technical analysis suggested that spot gold could test support at $1,701 an ounce, a break below which will open the way towards $1,672.24, said Reuters market analyst Wang Tao.