Gold fell to its lowest in seven weeks on Monday, as the dollar gained following the deal on Greek debt, which curbed investor flight for safety, while the absence of major consumer China due to a holiday also took its toll. Spot gold dropped 0.9 percent to its lowest level since January 9 at $1,191.01 an ounce before rising slightly to be down 0.6 percent at $1,194.71 by 1228 GMT.
The metal has posted four straight weeks of declines, dented by a strong dollar, expectations of a US interest rate hike and hopes of a deal between Greece and its lenders. "Gold has lost the $1,200 level which is damaging from a psychological point of view ... and it is back to the lows seen at the beginning of January ... that's triggering some additional sell orders," said Mitsubishi Corp strategist Jonathan Butler.
The dollar index rose 0.6 percent, making gold more expensive for holders of other currencies. Euro zone finance ministers late on Friday reached an agreement to extend heavily indebted Greece's financial rescue for four months. The deal removed the immediate risk of Greece running out of money next month and possibly being forced out of the single currency area.
Gold was lacking support from buyers in China, the world's No 2 gold consumer, where markets have been shut since Wednesday for the Lunar New Year holiday. "With China temporarily out of the market and apparent progress on the Greek bailout, the path of least resistance appears lower for gold and also silver," said HSBC in a note.
Silver rose 0.3 percent to $16.27 an ounce, while platinum dropped to a fresh 5-1/2 year low at $1,150.80 an ounce. Palladium fell 0.3 percent to $774.50 an ounce. Key events for gold prices this week could be Federal Reserve Chair Janet Yellen's semiannual address to the Senate Banking Committee on February 24 and a raft of US economic data.
"Janet Yellen's testimony ... will be picked over for any signs of when interest rates are going to rise... Gold is going to trade on the back of that," Butler said. Hedge funds and money managers cut their bullish stance in gold futures and options for a third straight week, taking it to a six-week low in the week to February 17, data showed on Friday. However, holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.23 percent to 771.25 tonnes on Friday - a second straight day of inflows.
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