Gold hovers near $1,200 as Greece, dollar eyed for cues

Gold held close to its highest in nearly four weeks on Monday after climbing last week on hopes a U.S. interest rate hike may not come as soon as some had expected, but gains were curbed by possible signs of progress in Greek debt talks.

Spot gold had dipped 0.1 percent to $1,198.31 an ounce by 0043 GMT, near the $1,205.50 hit last week, which was its highest since May 26.

Gold rallied last week on a softer dollar after Federal Reserve policymakers said a rate increase would be appropriate only after further improvement in the labor market and greater confidence that inflation would rise.

Gold held close to its highest in nearly four weeks on Monday after climbing last week on hopes a U.S. interest rate hike may not come as soon as some had expected, but gains were curbed by possible signs of progress in Greek debt talks.

Spot gold had dipped 0.1 percent to $1,198.31 an ounce by 0043 GMT, near the $1,205.50 hit last week, which was its highest since May 26.

Gold rallied last week on a softer dollar after Federal Reserve policymakers said a rate increase would be appropriate only after further improvement in the labor market and greater confidence that inflation would rise.

Non-interest-paying gold has benefited from a record-low rate environment following the 2007-2009 financial crisis. Higher rates would increase the opportunity cost of holding the metal.
Bullion had also seen some safe-haven bids from investors worried over a Greek debt crisis that they feared could result in a default and the exit of Athens from the euro zone.

But those bids could now retreat as Greek Prime Minister Alexis Tsipras made a new offer on a reforms package to foreign creditors on Sunday, signalling 11th-hour concessions to break a deadlock that has pushed Greece to the brink of bankruptcy.

The newly elected head of South Africa's biggest mine union said on Sunday that his members were still being paid "apartheid" wages, signalling a hard line ahead of gold sector wage talks due to start on Monday.

Hedge funds and money managers slashed bullish bets on silver to the lowest in seven months in the latest week and also lowered long positions in gold, U.S. Commodity Futures Trading Commission data showed.

Russia's gold reserves rose to 40.2 million troy ounces as of June 1 compared with 40.1 million troy ounces a month earlier, the central bank said on Friday.