Gold prices retreated Tuesday as the dollar rose in value, investors took profit after more than three weeks of gains and talks between Greece's private creditors and Eurozone officials hit a snag.
The Dollar Index, which measures the greenback against a basket of major currencies rose 0.1 percent to 80.01. The more the dollar gains in value the more expensive gold becomes for people who use non-U.S. currencies, thus dampening demand.
Despite the dollar's gains, the euro was up, too, after Markit Economics released a survey of European manufacturing and services officials indicating that business, which had been contracting in December, increased this month.
Investors took profits after nearly a month of gains. Since Dec. 29, 2011, when gold on the Comex closed at $1,540 per troy ounce, the yellow metal has risen more than eight percent.
Talks between Brussels and the banks and hedge funds that hold its massive debts broke down Monday over what private creditors will get in return for forgiving much of the $19 billion Greece is supposed to pay back next month. Eurozone officials turned down demands by private creditors that they be given four-percent coupons on long-dated bonds in exchange for maturing bonds.
Gold's price, which has reached a six-week high, is expected to face technical resistance around $1,684.
Gold needs to break and hold above the $1,683-$1,685 mark in the next few sessions to cross the $1,705-$1,720 mark; else we are possibly heading first to $1,631, Pradeep Unni, senior analyst at Richcomm Global Services, told Reuters. Recent price stability and mushrooming demand from the Middle East and India is helping the physical markets. However, the market is unlikely to sustain the recent gains given the ongoing uncertainty in the euro-zone with respect to Greece.
Gold on the Comex fell $8.90 to $1,669.40, while spot gold fell $6.62 to $1,670.41.
Silver on the Comex fell, while spot silver slipped 12 cents to $32.28.