Gold near seven-week low in Singapore on Greek debt deal

Gold hovered around the key $1,200-an-ounce level on Monday, its lowest in seven weeks, as support for the safe-haven metal eased after a deal was struck over Greece's debt, while the absence of major consumer China also took a toll.

Spot gold was little changed at $1,202.10 an ounce by 0225 GMT, after dropping to $1,197.95 in the previous session as safe-haven bids receded. The metal recorded its fourth straight weekly decline on Friday.

Eurozone finance ministers reached an agreement to extend heavily indebted Greece's financial rescue by four months, officials on both sides said.

The deal removes the immediate risk of Greece running out of money next month and possibly being forced out of the single currency area.

 

"With China temporarily out of the market and apparent progress on the Greek bailout, the path of least resistance appears lower for gold and also silver," said HSBC analyst James Steel.

Key events for gold prices this week could be US Federal Reserve Chair Janet Yellen's semiannual address to the Senate Banking Committee on Feb. 24 and a raft of US economic data, including homes sales and consumer confidence, Steel said.

Technically, gold will face resistance at $1,215, while support will come in at $1,197, followed by $1,190, MKS Group said.

China, the No. 2 gold consumer, has been shut since Wednesday for the Lunar New Year holiday, removing a key support for bullion.

Chinese buying typically provides a floor for falling gold prices, but their absence along with a strong dollar has hurt the yellow metal.

The greenback has been robust in recent months on expectations the Fed would soon raise rates on the back of a strong economic recovery in the United States.

The dollar index gained on Monday, hurting gold's appeal as a hedge and making the metal more expensive for holders of other currencies.

Investors remain cautious about gold's price outlook. Hedge funds and money managers cut their bullish stance in gold futures and options for a third straight week, taking it to a six-week low in the week to Feb. 17, US Commodity Futures Trading Commission data showed on Friday.

However, holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.23 percent to 771.25 tonnes on Friday - a second straight day of inflows.