But gold's appeal as a refuge from uncertain economic conditions remained intact as indicated by the holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, which rose to a record high.

US lawmakers resumed talks on how to avoid $600 billion worth of tax hikes and spending cuts that are due to kick off in early 2013, but progress has been slow.

The threat of the US economy slipping off the fiscal cliff is likely to keep gold prices supported, but the strength in the dollar -- a more popular safe haven -- is likely to put a cap on gains.

The dollar index rebounded from a 3-1/2-week low hit in the previous session, supported by worries about lingering euro zone debt crisis and decent economic data from the United States.

"We may see gold consolidate or correct a bit in the short term as the market lacks incentives after the Greek deal, while the dollar appears supported," said Li Ning, an analyst at Shanghai CIFCO Futures.

There is not much room on the downside, and prices are firmly supported by the 20-day moving average at about $1,724 an ounce, she added.

Reuters market analyst Wang Tao expected spot gold to retrace to $1,722 during the day, as it may have peaked on its rebound from the Nov. 5 low of $1,672.24.

Spot gold was little changed at $1,741.30 an ounce by 0326 GMT, after two days of decline.

US gold traded nearly flat at $1,741.50.