Gold inched higher after hitting a 2-1/2 week low on Thursday as the dollar and global shares fell alongside uncertainty about Greece and an unexpected rise in US jobless claims. Spot gold was up 0.1 percent at $1,188.30 an ounce by 2:26 pm EDT (1826 GMT) after falling to $1,180.55, the lowest since May 11. US gold futures for June delivery settled up $2.50 at $1,188.10 an ounce.
European Central Bank Vice President Vitor Constancio underlined the gravity of the situation facing Greece, talking openly about a possible default that would be the first of its kind in the eurozone. A worsening of the Greek debt crisis could trigger demand for gold coins and bars. Gold is usually seen as a hedge against political and financial risk, although the impact on demand from wider political worries is usually short-lived.
"The market has been responding to fairly convinced statements from (Fed Chair) Janet Yellen that they are ready to implement a tighter monetary policy," said Bart Melek, head of commodity strategy for TD Securities in Toronto. "We're going to be pretty range bound for the next little while," Melek said. "The reason is we're waiting for the Fed."
Higher US interest rates increase the opportunity cost of holding non-yielding bullion. Silver was down 0.1 percent at $16.65 an ounce. Platinum fell 0.5 percent to $1,111.75 an ounce, while palladium lost 0.1 percent to $783.50 an ounce.
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