Gold struggled Wednesday to hold recent gains as growing concerns of an imminent Greek default offset hope that Chinese authorities will act to reverse a slowdown of the world's second-biggest economy.
Athens must make an $18.4 billion debt repayment by March 20, something far beyond its means, and has been having on-again-off-again talks with creditors. Hedge funds holding Greek sovereign debt are believed to be resisting calls to give up 50 percent and 85 percent of what they are owed.
If Athens fails to pay on March 20, those hedge funds will collect insurance on the default, a fact that lessens their incentive to agree to a so-called haircut.
Expectations of a default weighed on gold, an indication many investors continue to see it as a risk asset, like stocks.
That linkage with risk assets also emerged as Asian stocks rallied.
China's Economic Information newspaper reported Wednesday that Beijing may cut banks' reserve requirement ratio, the amount of cash they must keep on hand, by half a percentage point within days, according the Wall Street Journal.
Expectations of stimulus energized stocks in Hong Kong, Tokyo and Shanghai -- and supported gold prices.
European stocks and the euro rose on a call by the International Monetary Fund for $1 trillion to respond to the Eurozone crisis. The call suggests an intent by the IMF to aggressively move to prevent a default by Greece and other struggling nations, like Spain and Italy.
The dollar fell 0.64 percent against a basket of major currencies, making gold less expensive for buyers using non-U.S. currencies.
In the last three weeks the price of gold has risen 7.5 percent.
Gold for February delivery on the Comex was up 90 cents to $1,656.50, and gold for immediate delivery rose 49 cents to $1,656.21.
Silver for March delivery added 15 cents to $30.29, while silver for immediate delivery climbed nine cents to $30.32.