Precious metal edges up after 1% loss overnight
Gold edged higher on Thursday, after earlier
dropping to a five-week low, as confusion over Greece's debt negotiations with
its European lenders dominated markets, drumming up some safe-haven bids for
Spot gold fell to $1,216.45 an ounce, its lowest
since January 9, before recovering to trade up 0.1 percent at $1,220 by 0326
The metal lost 1.2 percent on Wednesday as the dollar
hit a three-week peak against a basket of major currencies on weakness in the
euro and the yen.
"We continue to see a conflicted gold market
with the market split between bears and bulls as the US dollar strength
improves against global economic issues and safe-haven demand," said ANZ
analyst Victor Thianpiriya.
Gold, seen as a safe-haven asset, tends to get a
boost during times of economic and geopolitical uncertainty.
Financial markets are under pressure as euro zone
finance ministers were unable to agree with Greece a final statement or a way
to continue talks until their next meeting on Monday, following hours of
discussions in Brussels to extend an international bailout.
Greek Finance Minister Yanis Varoufakis played down
a failure to reach a common position with the rest of the euro zone and said he
believed a "healing deal" on Greece's finances could be reached on
The uncertainty knocked down Asian stocks and the
euro on Thursday as markets feared that Greece could exit the euro zone if it
fails to reach a deal.
Gold's sell-off for much of this week despite the
Greek issue suggests that markets are either expecting an ultimately positive
result, or they may be discounting the country's possible exit as a net
positive, said INTL FCStone analyst Edward Meir.
"We also have to suspect that with a Federal
Reserve rate increase in the offing and US equity markets looking much
steadier, gold is finding it difficult to gain traction on the upside,"
The Fed should raise interest rates in June, a top
Fed official said earlier this week, saying the US economy was strengthening
and inflation would move back to the central bank's target.
Any hike by the Fed, which has kept rates near zero
since 2008 to stimulate the US economy, could further strengthen the dollar and
in turn hurt demand for bullion, a non-interest-bearing asset.