SINGAPORE: Gold prices traded steady around $1,700 on Wednesday, after buying related to options' expiration lifted prices by more than 1 percent in the previous session, as investors continue to watch the unfolding euro zone debt crisis. Gold bounced back above $1,700 after worsening euro zone debt crisis and failure of US policymakers to agree on a budget reduction plan sent spot prices down to as low as $1,665.88 earlier in the week. With Spain's bond yields rising to 14-year highs, the IMF beefed up its lending instruments and launched a six-month liquidity line, throwing help to countries with solid policies that may be at risk from the euro zone debt crisis. "Prices will probably trade between $1,680 to $1,700 for the rest of the week as investors prefer to stay out of the market with cash in hand," said Ronald Leung, a dealer at Lee Cheong Gold Dealers. "Europe does not seem able to solve the debt problem in a short time." Some physical buying emerged in the past few days when prices dipped below $1,700, which has eased with the price rebound, he added. Spot gold edged up 0.4 percent to $1,706.09 an ounce by 0257 GMT, extending a rise of more than 1 percent in the previous session. US gold inched up 0.3 percent to $1,707.60. Technical analysis suggested that spot gold could rebound to around $1,715 an ounce, said Reuters market analyst Wang Tao. Although gold prices still face a threat from a sharp sell-off in other markets, expectations of further easing policy in both sides of the Atlantic is supporting sentiment. A few officials at the US Federal Reserve believe the outlook for modest growth might warrant an easier policy at a recent meeting of the central bank. "For the longer term it is still a very bullish story out there. Gold at $1,700 will be very good value, should either the US or ECB ( European Central Bank), or both, move to inject liquidity in the market," said a Singapore-based trader. Spot silver lost half a percent to $32.53, after jumping 3.4 percent in the previous session. US silver fell 1.3 percent to $32.53, giving up some of its 5.9-percent rise in the previous session.'

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