By Clementine Wallop Gold prices held in a tight range Tuesday, struggling for upside traction as risk appetite returned, which limited demand for the precious metal as a safe-haven asset. Spot gold was trading at $1,606.05 a troy ounce at 0445 GMT, up 25 cents from its previous settlement. It traded no lower than $1,602.40/oz and no higher than $1,607/oz, as investors weighed calmer sentiment across financial markets following widespread risk aversion Monday against the potential for more volatility over the next few days. Investor attention remains focused on developments in the euro zone after Cyprus' controversial bailout deal sparked heavy losses in stocks and industrial commodities Monday, traders and analysts said. "It's the same story as before [in the euro zone] but it's just a different name in the news...Ultimately there is going to be more volatility in metal prices and gold prices are very fickle," AME Group Economist Matt Fusarelli said. A statement from the U.S. Federal Open Market Committee, due Wednesday, is also likely to lend direction to gold prices this week, a Hong Kong-based trader said. Any sign that the Fed is shifting its loose monetary stance could spark choppy trading conditions in U.S. hours Wednesday, he said. While a break above psychological resistance at $1,600/oz Monday has put gold on a firmer technical footing, recent exchange-traded fund redemptions indicate some investors are cautious on gold's near to mid-term prospects, ANZ analysts said in a report. "Sentiment towards gold remains weak, and there has not yet been a significant turnaround," the house said, after reported holdings in the SPDR Gold Trust dropped to a 21-month low Monday. Spot silver rose alongside gold, trading 0.3% higher at $28.98/oz. Silver is trapped in a near-term range between $27.75/oz and $29.50/oz, as gold's gains lend support but recent losses in industrial commodities such as base metals weigh, Triland Metals analysts said in a report. Spot platinum was up 0.2% at $1,578.50/oz, and palladium gained 0.2% to trade at $762.50/oz. --Lucy Craymer in Wellington contributed to this report Write to Clementine Wallop at clementine.wallop@dowjones.com

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