Gold prices were steady after touching a fresh four-week high in European trade on Tuesday as European geopolitical fears sapped risk appetite, underpinning safe haven demand for the precious metal.
Comex gold futures dipped 86 cents, or 0.07%, to $1,267.51 a troy ounce by 07.15 GMT after rising to $1,270.32 earlier, the highest since May 1. Meanwhile, spot gold was at $1,267.81. Also on the Comex, silver was last at $17.42 a troy ounce. It rose to $17.47 in overnight trade; a level not seen since April 27.
Concerns over the Greek bailout package, as well as British polls indicating that Prime Minister Theresa May's Conservative Party has less of a lead over the Labor Party than expected sapped risk appetite. Gold is used as an alternative investment during times of political and financial uncertainty.
Worries that Athens and its creditors may not reach an agreement over its bailout program in time mounted overnight, leading to concerns that the eurozone debt crisis could flare up again. Meanwhile, the tightening election race in the UK added to concerns over the political risk surrounding Brexit.
Gold's gains were held in check as the dollar firmed up against the euro and the pound. The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, rose 0.33% to 97.65, extending its pullback from last week's six-and-half month lows.
Gold and the dollar typically move in opposite directions, which mean if the dollar goes up, gold futures, which are denominated in the U.S. currency, will fall. Investors were looking ahead to Friday's U.S. employment report, which was expected to show that conditions in the labor market remain solid.
A strong U.S. jobs report would cement expectations for a rate hike by the Federal Reserve at its next meeting in June. Futures traders are currently pricing in around an 80% chance of a hike at the Fed's June 13-14 meeting, according to Investing.com's Fed Rate Monitor Tool.
However, market players are no longer convinced that the Fed will be able to raise rates two more times this year, with odds for a second hike by December currently at about 35%.
The median Fed policymaker forecast is for two more rate increases by year-end. But a recent run of disappointing U.S. economic data combined with signs of deepening political turmoil in the White House raised doubts over the Fed's ability to raise rates as much as it would like before the end of the year.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
Elsewhere in metals trading, platinum was down 1.09% to $952.35, while palladium added 0.91% to trade at $793.85 an ounce. Copper futures fell 0.97% to $2.541 a pound.