July 6, 2015 / 4:27 AM / 2 years ago

PRECIOUS-Gold's safe-haven gains from Greece fizzle on robust dollar

* Gold falls back after 0.6 percent gain
    * Silver, platinum, palladium all decline
    * Greece rejects bailout terms in referendum

 (Adds comment, updates prices)
    By A. Ananthalakshmi
    SINGAPORE, July 6 (Reuters) - Gold gave up early gains on
Monday as a robust dollar outweighed safe-haven demand after
Greeks rejected the terms of a bailout package in a referendum. 
    The failure to sustain the rally shows gold's struggle
amidst prospects of higher U.S. interest rates despite the
uncertainty over Athens' financial situation and its future in
the euro zone, a situation that would typically garner safety
bids for bullion.
    Spot gold was flat at $1,167.50 an ounce by 0652 GMT,
after earlier jumping by as much as 0.6 percent. 
    U.S. gold climbed nearly 1 percent in its biggest
daily gain in about two weeks to $1,174.40 before paring some
gains to trade up 0.3 percent. 
    Silver, platinum and palladium all
declined.
    "Gold's deterioration is evidence of the market discounting
wider contagion risk from a Greek default and increasing
certainty of a U.S. rate hike this year," Barclays analysts said
in a note on Monday.
    In a referendum on Sunday, Greeks overwhelmingly rejected
conditions of a rescue package from creditors. Official figures
showed 61 percent of Greeks had rejected a deal that would have
imposed more austerity measures on an already ravaged economy.
    The vote leaves Greece in uncharted waters: risking a
banking collapse that could force it out of the euro. Without
more emergency funding from the European Central Bank, Greece's
banks could run out of cash within days. 
    Greek Finance Minister Yanis Varoufakis, whose forceful
denunciations of creditors alienated many of his euro zone
colleagues, resigned on Monday, saying Prime Minister Alexis
Tsipras believed it would help smooth the path to a new aid
deal. 
    Gold, typically seen as an alternative investment during
times of financial and economic uncertainties, rallied early in
Asian hours as the euro slumped and U.S. equity futures fell on
risk-averse sentiment in the market. 
    But the precious metal failed to hold the gains, even as
other safe havens such as the yen rallied and the dollar climbed
to its highest in a month. 
    "Its safe-haven property does not appear to be carrying much
weight," said Howie Lee, an analyst at Phillip Futures.
    A higher dollar makes gold more expensive for holders of
other currencies, while also lowering its appeal as a hedge.
    The greenback has also been supported recently by
expectations the Federal Reserve will raise interest rates from
record lows this year. That has weighed on gold, a
non-interest-paying asset.
    
    PRICES AT 0652 GMT    
 Metal            Last      Change   Pct chg
                                             
 Spot gold          1167.5     0.06      0.01
 Spot silver         15.59    -0.08     -0.51
 Spot platinum      1064.5   -15.35     -1.42
 Spot palladium        672    -7.65     -1.13
 Comex gold         1166.8      3.3      0.28
 Comex silver       15.565    0.003      0.02
 Euro               1.1047                   
 DXY                 96.33                   
                                             
 COMEX gold and silver contracts show the
 most active months
 
 (Reporting by A. Ananthalakshmi; Editing by Tom Hogue and Sunil
Nair)

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