By A. Ananthalakshmi
SINGAPORE (Reuters) - Gold gave up some of its overnight gains on Wednesday as the U.S. dollar firmed after earlier losses, with investors keeping their attention focused on the Greek debt crisis and its impact on the currency markets.
Spot gold eased 0.3 percent to $1,198.80 an ounce by 0342 GMT, after gaining 0.5 percent on Tuesday.
"Gold is closely tracking the U.S. dollar at the moment. There isn't any big economic data so investors are following the Greek drama," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
A strong rally in stock markets was also keeping investors out of gold, Leung said.
Japanese shares rallied to a 15-year high on Wednesday on expectations of improved corporate earnings.
Gold, often seen as a safe-haven investment, tends to see a drop in demand when equities are doing well.
The dollar held firm against a basket of major currencies on Wednesday, after putting up a mixed performance overnight.
Greece, which is quickly running out of cash, pledged to its euro zone partners in February that by the end of April it would agree with creditors on a comprehensive list of reforms to get 7.2 billion euros remaining from its bailout.
But no package will be ready by Friday, when euro zone ministers are to meet in Riga, and it was also unlikely one will be ready by the end of the month, according to a senior euro zone official.
Prolonged uncertainty over the debt crisis - which if unresolved could see Greece exiting the euro zone - could boost demand for bullion, seen as a safe-haven, though the resulting strength in the dollar could limit gains.
In a reflection of investor sentiment, SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.45 percent to 742.35 tonnes on Tuesday.
Traders were also eyeing activity in the physical markets.
India, the top bullion consumer, celebrated the gold-buying festival of Akshaya Tritiya on Tuesday. Gold purchases started slowly, despite a fall in local prices, as hard times in rural areas have hit demand and many buyers are holding back because they expect prices to fall even further.
(Editing by Himani Sarkar)
