Spot gold gained half a percent on Tuesday, snapping two straight sessions of losses, with investors waiting for the next development in Greece's debt restructuring talks as a new deadline looms.
Bullion fell to a 1-1/2-week low in the previous session when Greece postponed the decision on accepting painful terms for a new bailout until Tuesday.
Most markets were subdued, as investors were split over whether the wrangling over Greece would eventually be resolved or trigger contagion across other vulnerable euro zone countries.
Spot gold gained half a percent to $1,728.09 an ounce by 0713 GMT, off the 1-1/2-week low of $1,711.29 touched in the previous session.
U.S. gold edged up 0.3 percent to $1,730.60. Although gold prices fell for two consecutive sessions, analysts and traders said gold's long-term bullish trend remains intact, supported by safe-haven demand amid a murky global economic outlook and hopes of monetary easing in the world's key economies.
"What we saw was a technical reaction after a solid run, after being in overbought territory, which coincided with the better-than-expected U.S. non-farm payrolls number," said Dominic Schnider, head of commodity research at UBS Wealth Management.
The surprisingly good U.S. jobs data knocked spot gold down nearly 2 percent on Friday, as it diminished hopes for fresh quantitative easing any time soon, but the ultra-loose monetary policy of the U.S. Federal Reserve will help boost gold in the long run, Schnider and other analysts said.
A key support level for gold would be $1,680, Schnider added.
Technical analysis suggested that spot gold could fall to $1,696 during the day, said Reuters market analyst Wang Tao.
Major bullion bank HSBC said it was keeping its 2012 average gold forecast at $1,850 an ounce due to accommodative global monetary policies and investor jitters about financial markets.
Data showed that China's gold imports from Hong Kong in 2011 grew more than three times from a year earlier to 427,877 kilograms, even after a sharp drop in December's shipment.
The price decline in gold has attracted some buying in Asia, including India and China, but in Japan investors stood on the sidelines awaiting further trading cues.
"Everybody keeps watching what's going to happen, and we haven't seen any interest on either buying or selling," said an official at a large bullion house in Tokyo.
The discount for gold bars in Tokyo widened to 75 cents an ounce from 50 cents in mid-January, he added.
