Gold points higher, but firming dollar weighs!

Gold picked up slightly following a three-day loss, hovering around $1,766 areas ahead of the U.S. market buzz on Wednesday, as the dollar continue to build up on the darkening outlook of the global economy and the euro zone debt crisis kept a heavy weight on appetite for bullions.

Spot gold was up 0.18 percent at $1,765.90 an ounce as of 12:33 GMT, from an opening of $1,762.60, after the metal recorded an intraday high of $1,767.95 and low of $1,760.20. Gold futures were up 0.16 percent at $1,766.40, from an opening of $1,764.30.

Metals market is still hung over the latest stimulus measures by the U.S. Federal Reserve and European Central Bank, but lack of first-tier fundamentals has so far kept less-riskier assets into favor, tipping the greenback to its highest in nearly a month against six currencies.

The U.S. dollar drew some strength from the vulnerable euro. The USDIX, which tracks the performance of the greenback against a six-currency basket, was down 0.5 percent at 79.89, after recording a session high of 80.31 and low of 80.01, compared with the day`s opening of 80.08.

Risk appetite continue to be dampened, with Spain resisting a bailout request and German Chancellor Angela Merkel shy to pledge further aid to Greece as her visit to the Athens was welcomed by ruthless protests from a nation marred by years of austerity measures and recession.

Still, the yellow precious metal could be poised for its first four-day losing streak since August if the euro continued to show weakness against its U.S. counterpart, as fears continue to weigh on market sentiment since the International Monetary Fund shaved its global growth forecast for 2013 and 2013.

Eyes will be on the Fed’s Beige Book ahead of the next Fed Policy Meeting at the end of the month and that will keep investors tensed to see what the Feds will say about the state of the economy, even if it is a very slim chance more easing will be undertaken by the Fed this month.

We also expect choppy correctional trading for gold to continue as European tension prevails ahead of the EU Summit next week that might see more surprises from the leaders!

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