LONDON: Gold edged lower on Monday, as the dollar climbed versus the euro and the prospect of higher US interest rates loomed, but uncertainty over the Greek debt crisis limited losses.

Spot gold was down 0.3 per cent at $1,186.79(Dh4,355.50) an ounce by 1000 GMT. It posted a second consecutive weekly fall last week, falling to a near-three-week low on Thursday.

US gold futures for August delivery were down $3.00 at $1,186.70 an ounce.

The dollar rose 0.5 per cent versus a basket of leading currencies, mostly due to euro losses after Greece missed a self-imposed Sunday deadline for reaching an agreement with its lenders to unlock aid.

“Greece does have a sway over the price developments of gold at the moment,” Saxo Bank senior manager Ole Hansen.

“There is no much interest in gold but this is an event week, we have US nonfarm payrolls data, the ECB meeting, we have debt repayment deadline for Greece and there is a good chance we could see some bigger price swings this week.” The US currency has been strengthening on expectations the US Federal Reserve would soon raise interest rates from record lows.

Higher rates would reduce demand for non-interest-paying bullion.

Investors shrugged off data on Friday showing the US economy contracted in the first quarter, figures that were seen as backward-looking and unlikely to derail the prospect of an interest rate hike later this year.

“With gold’s technicals looking neutral and fundamentals mixed, we think prices will continue to trade uneventfully in June and see a $1,160-$1,230 trading range prevailing,” INTL FCStone said in a note.

“Greece and global equity markets remain the perennial wild cards,” it added.

Athens and its Euro zone and International Monetary Fund creditors have been locked in talks for months on a reform programme.

Without a deal, Greece risks default or bankruptcy in weeks, a possibility that has supported gold prices to an extent.

Athens missed a self-imposed Sunday deadline for reaching an agreement to unlock aid, sources close to the talks said.

Any worsening of the Greek debt crisis could potentially trigger demand for gold coins and bars. The metal is usually seen as a hedge against political and financial risk, although the impact on demand from wider political worries is usually short lived.

In a reflection of investor sentiment in bullion, hedge funds and money managers cut their bullish bet in Comex gold during the week ended May 26, US Commodity Futures Trading Commission data showed on Friday.

Silver was down 0.2 per cent at $16.67 an ounce, having hit its lowest since May 13 at $16.51 on Wednesday.

Platinum retreated to its lowest since March 18 at $1,100.25 an ounce, while palladium was unchanged at $774.65 an ounce.