Gold dips below $1,200 on relief over Greece

LONDON: Gold slid below $1,200 an ounce on Tuesday as relief that Greece had submitted reform plans to its international partners boosted appetite for assets viewed as higher-risk, such as stocks.

Strength in the dollar ahead of Federal Reserve Chair Janet Yellen's Senate testimony added to pressure on gold. Investors are awaiting her comments for clues on the timing of the first US interest rate rise in nearly a decade, expected later this year.

Spot gold was down 0.5 percent at $1,195.80 an ounce at 1031 GMT, while US gold futures for April delivery fell $5 an ounce to $1,195.80.

European shares rose on Tuesday and Greek shares outperformed after a list of proposed reforms submitted by Greece was received favourably by the European Commission.

"Hope that there will be an agreement, and that the list of reforms that Greece presented overnight is sufficient to meet the demand of the Euro group, is (pressuring) gold, coupled with the firmer dollar," Commerzbank analyst Daniel Briesemann said.

The dollar rose on expectations that Yellen would keep the Federal Reserve nudging towards US rate increases.

Investors are keen to see if she will echo the minutes of the Fed's January meeting, when policymakers expressed the view that raising rates too soon could hold back the US recovery.

Speculation that the Fed is poised to increase rates has weighed on gold over the past year. Such a move would lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which the metal is priced.

Expectations for a rate rise have led to months of dollar strength, lifting it to an 11-year high against a basket of currencies in January.

Gold rose in spite of this as concerns over the euro zone economy grew after the anti-bailout Syriza party won a snap election in Greece. The metal is now losing ground as markets digest the prospect of Greece gaining a financial rescue deal, which could soften demand gold as a haven from risk.

"At least in the near-term, an agreement would be negative for gold," HSBC said in a note.

A number of major Asian gold markets, most notably China, remained closed for the Lunar New Year break, removing key support for gold prices, dealers said.

Among other precious metals, silver was down 0.3 percent at $16.24 an ounce, while platinum slipped by 0.2 percent to $1,158.55 and palladium fell 0.2 percent to $783.15.