By Jan Harvey
LONDON (Reuters) - Gold edged back above $1,200 an ounce on Tuesday as the dollar pared early gains, though prices remained under pressure as a rally in global equities diverted some interest from the metal.
European stocks rose 0.6 percent after a strong session in Asia and after China's latest step to prop up its faltering economy lifted global equities.
Spot gold was $1,201.63 an ounce at 1202 GMT, up 0.5 percent. U.S. gold futures for June delivery were up $7.70 an ounce at $1,201.40.
"The U.S. dollar has come off a bit, the euro has jumped higher," Mitsubishi precious metals analyst Jonathan Butler said. "Gold is consolidating above its 50-day moving average (at $1,195) after yesterday's test of it at the close."
Upbeat European earnings reports helped to lift global equities back towards record highs, offsetting concern over a possible Greek default.
Worries about Greece pressured the euro in early trade, though it later pared losses agains the dollar. That took some pressure off gold, which is priced in the U.S. currency.
Gold prices have been weighed down this year by expectations that the Federal Reserve is preparing to increase interest rates for the first time in nearly a decade.
That would boost the dollar and lift the opportunity cost of holding non-yielding gold. Until further clarity is received on the outlook for U.S. rates, gold is likely to struggle for direction, analysts said.
"Overall uncertainty on the timing and pace of Fed tightening adds to investors' reluctance to put on sizeable positions at this point," UBS said in a note on Tuesday.
Physical demand in China, the second-largest gold consumer, was lacklustre overnight, traders said, with precious metals house MKS reporting "low turnover and modest price action" in Asian trading hours.
Traders were also watching physical demand in top consumer India, which on Tuesday celebrated the Akshaya Tritiya festival, considered one of the most auspicious days to buy gold.
Supply of the metal into India rose sharply in the build-up to the festival, but it remains to be seen if consumers will buy with their usual enthusiasm after a drop in gold prices.
Silver was up 1.6 percent at $16.15 an ounce, while platinum gained 1 percent to $1,155.49 and palladium rose 0.8 percent to $775.38.
(Additional reporting by A. Ananthalakshmi in Singapore; Editing by Alison Williams and David Goodman)
