London - Gold rose from two-week lows on Friday on caution ahead of crunch talks on Greece this weekend, although concerns over the longer-term outlook for the metal in an environment of rising interest rates capped gains.
Greece failed again to clinch a deal with its international creditors on Thursday, setting up a last-ditch effort on Saturday either to avert a default next week or start preparing to protect the euro zone from financial market turmoil.
Spot gold was up 0.3 percent at $1,177.20 an ounce at 09h20 GMT, while US gold futures for August delivery were up $4.90 an ounce at $1,176.40. Spot gold earlier fell to $1,169.98, its lowest since June 8.
“Gold for the moment seems to have found a bit of a floor, and that seems to have given confidence to buyers,” Societe Generale analyst Robin Bhar said.
“We're all watching Greece. If there is an agreement, gold should give up these modest gains.”
Gold also drew support from a rise in holdings of gold-backed exchange-traded funds, which issue securities backed by physical metal, this week after outflows earlier this year.
Holdings of the biggest gold ETF, SPDR Gold Shares, rose 6.9 tons on Thursday, their biggest one-day increase since February 2.
Global stocks fell on Friday as equity investors sought to cut exposure to risk after Greece and its creditors again failed to resolve their differences.
Expectations that the Federal Reserve is set to increase interest rates for the first time in nearly a decade, boosting the opportunity cost of holding non-yielding bullion, have pressured gold this year, keeping it in a narrow range.
Gold has held largely between $1,160 and $1,230 since mid-March, struggling to break higher despite an ostensibly bullish rise in tensions over Greece.
Silver was up 0.3 percent at $15.87 an ounce, having briefly touched a three-month low of $15.50. Spot platinum was down 0.2 percent at $1,079 an ounce, while spot palladium was down 0.2 percent at $676.35 an ounce.
Palladium fell to a near two-year low on Thursday, posting its biggest one-day drop since September, on concerns that demand is not rising quickly enough to offset plentiful supply.
“While short-term moves are driven by many factors and the metal faces a number of challenges, we think the underlying weakness is due to a sharp slowdown in global auto sales growth,” Macquarie said in a note.
Reuters