Gold edged higher on Tuesday in response to losses in the dollar after disappointing U.S. data and also as uncertainty persisted over whether a high-level meeting on Greece's debt crisis might lead to a significant breakthrough.
Spot gold rose 0.4 percent to $1,194 an ounce, while U.S. gold futures for August delivery rose $5.70 to settle at $1,194.40 an ounce.
It had climbed above $1,200 for the first time in a week in the previous session but failed to hold its gains on mixed U.S. economic data, which kept alive expectations the Fed will raise rates later this year from record lows. Higher rates would reduce demand for non-interest-paying bullion.
"It's definitely, in my opinion, a reflection of the euro-dollar developments of today," said Trey Reik, precious metal strategist for Sprott Assett Management USA, in Connecticut.
"I am a bit concerned that gold's not doing a little better today because these are fairly ideal conditions. Gold markets are very fragile and shallow right now."
The euro strengthened against the U.S. dollar, which was on track to post its biggest one-day loss against the single currency since mid-March, on expectations that Greece would reach a deal with its creditors.
The dollar was also weighed down by U.S. data showing new orders for factory goods fell unexpectedly in April.
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More U.S. economic data, culminating in the monthly non-farm payrolls report on Friday, will be watched by investors for clues on the timing of an interest rate rise. Higher rates would reduce demand for non-interest-paying bullion.
"People are still expecting a U.S. rate hike by the end of the year and then when you have weaker data then it tends to cause a little bit of panic on whether it will be a December rate hike or not," Citi strategist David Wilson said.
Bullion traders were also looking for news on the Greek debt crisis as the international creditor institutions agreed to work with "real intensity" in the coming days as they try to clinch a deal in debt negotiations with Athens.
In a reflection of bearish investor sentiment, holdings in SPDR Gold Trust, the biggest gold-backed exchange-traded fund, fell to their lowest since mid-Jan at 714.07 tonnes on Monday.
After a five-day streak of declines, spot platinum was up 0.8 percent at $1,108.10 an ounce, still close to its lowest in nearly 11 weeks. It was trading at the cheapest to gold since January 2013, with a $90 an ounce discount to the yellow metal.