U.S. gold futures ended higher on Wednesday, but off a 2010 peak hit earlier in the session after Standard & Poor's downgraded Spain's debt, as safe-haven demand eased due to steadier global markets.
Reports of a multibillion euro aid package for Greece failed to allay concerns over the euro zone's fiscal health.
A German member of parliament for the opposition Greens party said a euro zone/IMF aid package for Greece will be worth 100 billion to 120 billion euros ($160 billion) over three years, citing IMF Managing Director Dominique Strauss-Kahn.
Late Wednesday, spot gold was bid at $1,170.85 an ounce, up from $1,168.03 late in New York on Tuesday. U.S. gold futures for June delivery on the COMEX division of the New York Mercantile Exchange rose $9.60 to $1,171.80 an ounce. Gold ranged between $1,161 and $1,175.30 per ounce, the highest level since Dec. 4.
Earlier Wednesday, gold rose from earlier lows and bullion priced in euros, sterling and Swiss francs held near the record highs they hit on Tuesday after Standard & Poor's cut its ratings on Greece to junk status and downgraded Portugal.
"This kind of nervousness should be supportive for gold," said Societe General analyst David Wilson. "It is exactly the sort of environment gold thrives in. It has come back to being that safe haven that we saw at the beginning of last year."
The euro recovered on Wednesday from one-year lows it hit in earlier trade on news of the euro zone/IMF aid package for Greece. European Central Bank President Jean-Claude Trichet said he was confident the negotiations would conclude well.
Concern over the fiscal health of smaller euro zone economies has boosted gold but pressured the euro this year, causing the traditional relationship between the two to weaken.
Oil initially firmed as the measures were announced, while European shares lifted from lows after earlier hitting their lowest since early March. U.S. stocks opened higher ahead of a Federal Reserve interest rate decision due later.
Gold's near 6 percent gains this year have come largely on the back of rising sovereign risk, analysts said.
"Essentially, gold bears no counterparty or currency risk, being your ideal hedge against sovereign or default risks," said VTB Capital analyst Andrey Kryuchenkov in a note.
"Bullion will continue to draw support from its safe haven appeal, with euro zone fears intensifying from here."
Holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, hit a record 1,146.825 tons on Tuesday, up 0.609 tons.
Other precious metals such as silver, platinum and palladium, which are more industrial in use than gold, succumbed to selling pressure, however.
Platinum hit its lowest in a week on Wednesday at $1,695 an ounce, down 2 percent from Friday. It was later at $1,704 an ounce against $1,715.50 late on Tuesday.
Palladium was at $537.50 an ounce against $545.50, while silver was at $17.85 against $18.14.
"There is no doubt that sentiment for platinum and palladium is less emphatic than was the case earlier this month," said UBS analyst Edel Tully in a note.
"Considering the overtime drive both metals have been on since March 25, once the liquidation tide returned, platinum and palladium were wide open to heavy losses."
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