Gold edged up early on Friday from the previous day's 2-1/2-week low, supported by a softer dollar and uncertainty over Greece's debt talks, but remained under pressure from expectations US interest rates might rise soon. The prospect of higher rates, which would boost the opportunity cost of holding non-yielding gold while lifting the dollar, kept the metal on track for a second weekly drop.
Spot gold was up 0.3 percent at $1,190.70 an ounce at 2:33 pm EDT (1833 GMT), on track to close May up 0.6 pct, the second straight small monthly increase. US gold futures for June delivery settled up $1.30 an ounce at $1,189.40. "The gold market will eventually have to discount the fact that the Fed is not going to put through a series of rate hikes, one after the other, but will rather just put in one in and wait," said Edward Meir, INTL FCStone analyst.
"If it does that, I think the market should respond by moving a bit higher. In the meantime, we're in this drift doing nothing." The dollar weakened on Friday after data showed the US economy contracted in the first quarter. "The recent surge in the dollar, which pushed crude oil prices lower, has put pressure on gold," ING commodities analyst Hamza Khan said. There were mixed signals this week on the outcome of talks over Greece's debt, without which Athens risks default or bankruptcy in weeks.
"While gold hasn't gained much of an upside (from the uncertainty over Greece) ... it hasn't seen much of a downside, given the resurgence of the dollar," Standard Chartered's global head of commodities research Paul Horsnall said. Among other precious metals, silver was up 0.2 percent at $16.70 an ounce. Platinum was down 0.3 percent at $1,109.74 and palladium was down 1 percent at $774.98.
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