Gold steadies off 2-week low as dollar rally loses steam

Gold was steady after initially falling to a two-week low on Wednesday, as the dollar retreated from a one-month high, but the precious metal remained under pressure from expectations that a U.S. rate increase may come soon.

Spot gold was up 0.1 percent at $1,187.70 an ounce, after hitting $1,183.76 an ounce, the lowest since May 12. U.S. gold futures for June delivery settled down $1.30 at $1,185.60.

Gold had dropped 1.7 percent on Tuesday after firmer U.S. data supported the view that the U.S. Federal Reserve may raise interest rates this year.

Positive data on U.S. business investment spending, consumer confidence and house prices on Tuesday was in line with Fed Chair Janet Yellen's comments last week that indicated the U.S. central bank is poised to raise rates later this year.

The euro stabilized in volatile trading and stocks rose after reports that Greece and its creditors had reached an agreement that will provide it with debt relief.

"I think there's still a little bit of risk getting priced into gold, which is why it's showing consolidation," said Eli Tesfaye, senior market strategist for brokerage RJO Futures in Chicago.

"There's not a lot of pressure to sell it and a lot of technical sellers are not going to get aggressive until it starts going below $1,175."

U.S. stocks closed higher on Wednesday, recovering from Tuesday's selloff, as encouraging Greece headlines boosted investor sentiment amid a slight pause in the dollar and yield climb