LONDON: Gold prices slid below $1,680 an ounce on Wednesday, extending the previous day's retreat from two-week highs as the momentum sparked by expectations for further U.S. monetary easing faded after the metal stayed below key resistance. Traders cashed in gains in the yellow metal after it stalled beneath the $1,700 an ounce level on Tuesday, with selling accelerating late in the day after a COMEX options expiry. Traders are now awaiting fresh U.S. data for direction. Spot gold was down 0.2 percent at $1,676.69 an ounce at 0931 GMT. It is still on track for its best weekly performance since late February, however, after the Federal Reserve suggested a continuation of easy monetary policy will be necessary to support growth and bring down unemployment. "The Fed comments have given much-needed stimulus to an otherwise lacklustre, rangebound Gold market," Richcomm Global Services analyst Pradeep Unni said. "Resistance at 1694-1700 is formidable, but in the coming sessions, we (could) see that being scythed very convincingly." Dollar weakness is likely to be the catalyst for such a move, he said. The dollar recovered from early lows against a basket of other currencies but reamined under pressure after Fed chief Ben Bernanke reiterated his commitment to low interest rates. Dollar weakness makes assets priced in the U.S. unit cheaper for other currency holders. Early losses in the U.S. currency failed to benefit most commodities, as oil prices came under pressure from talk of a release of strategic oil reserves by the United States, and industrial metals eased. But activity on the wider markets suggested appetite for assets seen as higher risk was firm. European stocks inched higher and safe-haven German bund futures eased. PRICES STRUGGLE Physical gold demand has come under pressure this week from an ongoing strike among jewellers in India, the world's largest bullion consumer, who are protesting against a hike in import duty for bullion. India's Finance Minister said on Tuesday that the country won't cut import duty on gold, which it doubled to 4 percent this month, although it is considering jewellers' demands for the removal of a 0.3 percent excise duty on unbranded jewellery. "The removal of the excise tax may be a step towards meeting some of the grievances listed by Indian jewelers in the wake of the government budget," said HSBC in a note. "Until the Indian jewelers reopen their shops, Indian gold demand will remain weak. The dip in Indian demand may be partly offset by better Chinese physical demand as Shanghai premiums remain high."

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