Gold fell on Wednesday, as the dollar strengthened and hopes for progress in the Greek crisis revived after the country told international creditors Athens could accept their bailout offer if some conditions were changed.
The Greek situation has failed to spark robust safe-haven bids for gold, with bullion investors still focused on an expected increase in U.S. interest rates after more strong economic data.
"It's not clear whether it's good for gold because people think the dollar might rally and institutional investors are less interested in the gold market," Macquarie analyst Matthew Turner said.
"Everyone says this crisis should be good for gold, but no one has made a convincing case on who should be buying gold ... Greeks are going to hold euros."
was down 0.3 percent at $1,169.10 an ounce, still near the previous session's low of $1,166.35, which was the lowest since June 5.
U.S. gold futures for August delivery settled down $2.50 an ounce at $1,169.30.
There is scope for the Greek crisis to drive more risk-averse money into gold if it worsens to the point where Greece leaves the euro zone, or if there is contagion into other economies in the bloc, such as Italy, Portugal or Spain, traders said.
Gold is typically regarded as a good bet in times of financial and economic uncertainty. But the metal's underperformance points to broader weakness as investors expect the Federal Reserve to raise U.S. interest rates this year.
"ADP numbers came in strongly today," Mitsubishi Corp analyst Jonathan Butler said, referring to U.S. private employers adding 237,000 jobs in June. "I think that's one of the reasons that gold is off today and there are nonfarm payrolls tomorrow."
Spot palladium prices were up 4.2 percent at $697.50 an ounce, their biggest jump in two years in a bounce viewed as corrective after falling 14 percent in June, but also spurred by strong U.S. June auto sales.
"One cannot underestimate the impact motor vehicle sales will have on the palladium market," said Eli Tesfaye, senior market strategist for brokerage RJO Futures in Chicago.
Palladium is used in autocatalysts.