Gold steadied on Monday, giving up early gains as the prospect of a Greek debt default, which hit European shares, was offset by a strengthening dollar and wariness among investors over the metal’s longer-term outlook.
European shares tumbled more than 2 percent in early trade and the euro slid as Greeks woke up to shuttered banks and closed cash machines following the collapse of talks between Athens and its creditors.
Gold, which often benefits from uncertainty in the wider financial markets, initially rallied to a near one-week high at $1,186.91, but later gave up some of those gains.
Spot gold was up 0.1 percent at $1,175.86 an ounce at 1354 GMT, while U.S. gold futures for August delivery were up $2.20 an ounce at $1,175.40.
The wider environment remains relatively unfriendly for gold, with the United States still likely to raise interest rates at some point this year. That would increase the opportunity cost of holding non-yielding gold.
“Gold historically has always been the safe, tangible commodity which had appeal in times of turbulence, but recently, gold has increasingly trading off U.S. rate hike expectations, and how the dollar performs against the euro,” ING analyst Hamza Khan said.