Spot gold was little changed at US$1,741.30 an ounce by 0326 GMT, after two days of decline
Gold traded flat on Wednesday, after falling for two consecutive sessions, as the euphoria over a Greek debt deal fizzled out and investors shifted their focus to US negotiations to avert a looming fiscal disaster in the world's largest economy.
But gold's appeal as a refuge from uncertain economic conditions remained intact as indicated by the holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, which rose to a record high.
US lawmakers resumed talks on how to avoid US$600bn worth of tax hikes and spending cuts that are due to kick off in early 2013, but progress has been slow.
The threat of the US economy slipping off the fiscal cliff is likely to keep gold prices supported, but the strength in the dollar - a more popular safe haven - is likely to put a cap on gains.
The dollar index rebounded from a 3-1/2-week low hit in the previous session, supported by worries about lingering euro zone debt crisis and decent economic data from the United States.
"We may see gold consolidate or correct a bit in the short term as the market lacks incentives after the Greek deal, while the dollar appears supported," said Li Ning, an analyst at Shanghai CIFCO Futures.
There is not much room on the downside, and prices are firmly supported by the 20-day moving average at about US$1,724 an ounce, she added.
Reuters market analyst Wang Tao expected spot gold to retrace to US$1,722 during the day, as it may have peaked on its rebound from the November 5 low of US$1,672.24.
Spot gold was little changed at US$1,741.30 an ounce by 0326 GMT, after two days of decline.
US gold traded nearly flat at US$1,741.50.
Holdings of SPDR Gold Trust rose to a record high of 1,345.813 tonnes on November 27, while iShares Silver Trust, the world's largest silver ETF, saw its holdings remain near a two-month low of 9,818.07 tonnes.
In contrast to the stagnant holdings in the silver ETF, spot silver rose to US$34.26 an ounce on Tuesday, its loftiest level since mid-October, before easing to US$33.96 but still leading the year-to-date performance in the precious metals complex with a 23-percent rise.
Silver is notorious for its volatility. The metal burned the fingers of many investors last year during its specular rise to a historical high and a subsequent tumble that saw prices fall more than a third within ten trading days.
"I'm less sanguine about silver, as lots of mine supply is coming on line and silver doesn't have the same safe-haven status as gold," said a Sydney-based trader.