Gold steadied on Tuesday after stronger-than-expected German economic data helped the euro reverse early losses, but the single currency remained under pressure after rating agency Moody's said it may cut its triple-A ratings of France, Britain and Austria. Spot gold was at $1,720.10 an ounce at 1034 GMT against $1,722.49 late in New York on Monday. U.S. gold futures for February delivery were down $2.90 at $1,722.00. The euro rose to a session high against the dollar while German bund futures fell after German ZEW surprised on the upside and bolstered expectations that Europe's largest economy was holding up despite the debt crisis. Gold remains more sensitive to moves in the euro/dollar exchange rate in the short term than to rising risk aversion, which in the past has been a positive driver of prices. It remains vulnerable to fresh losses in the single currency, which quickly came off its post-data highs. "Gold is under some small pressure from a euro retreat, but in low volumes, as we seek to consolidate closer to decent support at 1,710," said VTB Capital analyst Andrey Kryuchenkov. "The market is pausing ahead of the euro zone finance ministers meeting tomorrow, as well as U.S. January (inflation data) on Friday," he added. "The January rally is exhausted, and some small-scale profit-taking has kicked in." While the Moody's news has rattled the markets, focus remains on Greece, which has acknowledged it still has much to do to persuade the European Union and International Monetary Fund to save it from bankruptcy. Euro zone finance ministers have asked the Greek government for details of how it will fill a 325 million euro gap in its plan for an extra 3.3 billion euros in savings this year ahead of their meeting in Brussels on Wednesday. Greece's austerity measures are proving painful. As parliament debated the package on Sunday night, riot police fought running battles with protesters outside. "In the short term, gold looks hostage to swings in investor risk sentiment regarding the euro and the euro zone sovereign debt situation, in which the focus is centered largely on Greece," said HSBC in a note. INDIAN DEMAND SOFTENS On the physical side of the market, gold demand in major consumer India was soft on Tuesday as traders bet prices would continue to fall, after briefly ticking higher. "Overnight demand was good as prices have come down... but now buying is stable," said one Mumbai dealer. In number two gold market China, the world's first yuan-denominated gold exchange-traded fund made a weak debut on the Hong Kong stock exchange, but analysts said demand would likely pick up as investors became more familiar with the product.

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