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Summary Spot gold was little changed at $1,766.19 an ounce, after rising 1 percent in the previous session.
Spot gold held onto gains made in the previous session on Tuesday, but hopes that a Franco-German summit will make progress to help quell the regions sovereign debt crisis are expected to keep a lid on prices.French President Nicolas Sarkozy and German Chancellor Angela Merkel meet in Paris from 1400 GMT to discuss what measures they can take to contain Europes debt crisis, which is now spreading to the continents core.There seems to be quite a bit of optimism before the meeting which has sent the euro to a three-week high to the dollar, said Ong Yi Ling, an analyst at Phillip Futures.So long as investors remain optimistic, chances are gold will trade a bit lower.ONG said investors expect the leaders to come to an agreement on expanding the European Financial Stability Fund (EFSF) or issue joint eurobonds.Spot gold little changed at $1,766.19 an ounce, after rising 1 percent in the previous session.US gold gained 0.6 percent to $1,769.Technical analysis echoed the sentiment in the market, and suggested gold could retrace to $1,750 an ounce.The euro dipped 0.1 percent to $1.4429. It had risen to a high near $1.4477 on Monday, the highest in nearly three weeks.Southeast Asias physical gold market took a breather from the buying frenzy on Monday when prices saw an intraday drop of 1 percent, dealers said.I was overwhelmed with physical demand out of Indonesia and Thailand, but it has cooled off a bit today, said a Singapore-based dealer, adding that there was some light demand from Vietnam after the country approved 5 tonnes of gold imports last week.Traders and analysts expected gold to weaken in the short term after a strong rally in July pushed bullion to consecutive record highs, which would provide investors a more attractive entry point.Golds longer-term allure remains untarnished, as global growth outlook continues to be cloudy and low-interest rate environment will keep investors interested in gold.The largest gold fund players including hedge fund titan John Paulson stuck with their bullion bets in the second quarter, opting not to follow George Soros who further reduced his gold ETF holdings.Holdings of the SPDR Gold Trust, the worlds largest gold-backed exchange-traded fund, stood at 1,260.173 tonnes by August 15, unchanged from Friday, off a one-year high of 1,309.922 tonnes hit last week.Spot platinum gained 0.9 percent to $1,819.24, on course for its sixth consecutive session of gains, its best run since January. It hit a two-month high of $1,820.75 earlier.
