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SubscribeGold futures were little changed near a six-week low during European morning trade on Wednesday, as the U.S. dollar pushed higher following the release of dismal euro zone manufacturing data.
Market participants looked ahead to the conclusion of the Federal Reserve's two-day policy-setting meeting later in the day, after the central bank announced its third round of quantitative easing last month.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,709.05 a troy ounce during European morning trade, nearly flat on the day.
Prices held in a tight trading range of USD1,715.15 a troy ounce, the session high and a daily low of USD1,707.05 a troy ounce. On Tuesday, gold prices touched USD1,704.75 a troy ounce, the cheapest level since September 7.
Gold prices were likely to find support at USD1,688.85 a troy ounce, the low from September 7 and resistance at USD1,731.25, the high from October 22.
The euro sank to a seven-day low against the U.S. dollar after weak euro zone PMI reports and disappointing German business confidence data added to concerns over the economic impact of the regions long-running debt crisis.
Markit said that its flash euro zone manufacturing purchasing managers index fell 45.3 in October from a final reading of 46.1 in September. Analysts had expected the index to ease up to 46.6 in October.
Germanys flash manufacturing PMI fell to 45.7 in October, from a final reading of 47.4 in September, disappointing expectations for an improvement to 48.0.
Meanwhile, a report by German research institute Ifo showed that its business climate index fell to100.0 in October, the lowest level since March 2010, from a reading of 101.4 in September.
The news prompted investors to shun riskier assets, such as stocks and commodities, and flock to traditional safe haven assets like the U.S. dollar and Treasuries.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.2% to trade at 80.20, the highest since October 11.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Gold traders are turning their attention to the Feds policy meeting on Wednesday after the central bank vowed last month to buy an average of USD40 billion of mortgage-backed securities a month until the economy shows significant improvement.
Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would pump more money into the financial system.
Elsewhere on the Comex, silver for December delivery rose 0.25% to trade at USD31.87 a troy ounce, while copper for December delivery added 0.25% to trade at USD3.577 a pound.
Copper prices remained supported after a report showed that China's HSBC manufacturing PMI came in at 49.1 in October, compared with a final reading of 47.9 in September.
The Asian nation is the worlds largest copper consumer, accounting for almost 40% of world consumption last year.
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