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Gold up on safe-haven bids from Greek crisis

Singapore - Gold rose on Monday on safe-haven bids after Greece and its creditors failed to strike a deal to avert a debt default, but a stronger dollar and a Federal Reserve policy meeting later this week kept gains in check.

Spot gold had edged up 0.3% to $1 184.28 an ounce by 09:16, after earlier climbing to a session-high of $1 186.20. The dollar rose 0.1% against a basket of major currencies.

Traders noted limited safe-haven bids from the Greek crisis. Talks over the weekend to end a deadlock between Athens and its international creditors broke up in failure. Greece is stumbling closer towards a debt default that threatens its future in the eurozone.

READ: Greeks demand less harsh terms after talks breakdown

Gold is typically in demand during times of political and financial uncertainty, although gains tend to be short-lived.

"Gold has drawn limited safe-haven interest – enough to stall the downside - and instead focussed on US monetary policy," Barclays analysts said in a note on Monday.

"Although gold has edged higher over the past week, the floor for prices is relatively soft, given the seasonally slow period for demand, which has been compounded by continued exchange-traded product outflows and the establishment of fresh shorts."

Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, are at their lowest since 2008, having seen more outflows on Friday. Other data showed hedge funds and money managers slashed their net long stance in gold during the week ended June 9.

Physical demand in top consuming region Asia has been weak as a tight price range and better yields elsewhere have kept investors away.

For trading cues, bullion investors were waiting to hear from the US central bank later this week on when it will make its first interest rate hike in nearly a decade.

The Fed will begin its two-day meeting on Tuesday, with a statement to be released on Wednesday.

A rate hike could diminish demand for non-interest-paying gold, while boosting the dollar.

Recent US economic data has been strong, supporting expectations that a rate hike could come before the end of the year and spooking gold investors.

"Gold has come under pressure in recent weeks on US dollar strength. We expect this to continue over the balance of the year as the market anticipates a rise in US interest rates," Morgan Stanley analyst Tom Price said, adding that clarity on the timing of a US rate hike may provide some short-term relief.

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