Gold edged higher on Wednesday after Greece said international lenders had rejected its latest proposals to avoid default, knocking stocks, and as a softer dollar helped the metal recover from a one-week low.
The precious metal has declined for the last three days as the dollar strengthened, and as optimism over the prospects for a deal on Greece prompted investors to favour assets seen as higher risk, such as stocks.
Prices hit their lowest since June 15 at $1,173.80 an ounce earlier on Wednesday, before recovering.
Spot gold was at $1,179.02 an ounce at 1012 GMT, up 0.1 per cent, while US gold futures for August delivery were up $1.90 an ounce at $1,178.50.
“Prices should be a little higher given the situation in Greece. Investors in Europe should definitely be looking at gold as an alternative safe-haven asset,’’ Capital Economics analyst Simona Gambarini said.
“From a technical point of view, the price isn’t very well supported at the moment,’’ she said. “Investment demand has been quite weak, which isn’t providing much momentum for the price.’’
European stocks fell after a Greek government official said Prime Minister Alexis Tsipras had told associates that Greece’s proposed measures had not been accepted by creditors.
Time is running out before the June 30 deadline when Greece has to repay €1.6 billion ($1.8 billion) to the International Monetary Fund, or face default.
The euro was up 0.3 per cent against the dollar, recovering from the previous session’s two-week low, when the single currency posted its biggest one-day loss since mid-March.
The dollar index eased as US 10-year Treasury yields dipped, with investors’ focus slowly shifting from Greece to prospects for higher US interest rates.
Speculation that the Federal Reserve will raise rates for the first time in nearly a decade has weighed on gold prices this year. Higher rates lift the opportunity cost of holding non-yielding bullion, and benefit the dollar.
Physical demand in top consuming region Asia has been sluggish as monsoon concerns weighed on demand in India and a better-yielding stock market kept buyers away in China.
Silver was up 0.9 per cent at $15.90 an ounce. Spot platinum was up 0.3 per cent at $1,067.70 an ounce, while spot palladium was up 0.9 per cent at $700.50 an ounce.