Republicans and the White House have made little progress in their negotiation to avert the automatic kick-off of $600 billion tax hikes and spending cuts early next year, dubbed as the "fiscal cliff", which could push the world's top economy into recession.

The stalemate in the negotiation made investors reluctant to jump in to the market, despite support from currencies. A softer dollar makes commodities priced in the greenback cheaper for holders of other currencies.

"Gold is still under pressure despite the support from currency market," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

"The physical market is quiet, there is some profit-taking, and we don't see fresh buying interest from the funds."

Spot gold inched down 0.2 percent to $1,712.14 an ounce by 0303 GMT. US gold lost half a percent to $1,712.50.

Technical analysis suggested that spot gold is poised to break a support at $1,707 an ounce and fall to $1,692 during the day, said Reuters market analyst Wang Tao.

The euro held just below its highest level since Oct. 22 hit in the previous session while the dollar index hovered above a one-month low, after upbeat news from Greece and Spain together with disappointing US data.