Gold barely moves after gains, euro zone crisis lingers

Gold hardly changed on Monday but was supported by debt crisis woes in Europe after euro zone ministers delayed a decision on Greece emergency loans, while investors awaited the outcome of a Federal Reserve meeting that could put pressure on the dollar.

Euro zone finance ministers postponed to July a final decision on extending a further €12 billion ($17 billion) in emergency loans to Greece, saying Athens would first have to introduce harsh austerity measures.

Spot gold hardly moved, standing at $1,537.71 an ounce by 0319 GMT after rising above $1,541 on Friday - its biggest one-day gain since May. Gold is still below a lifetime high around $1,575 touched in early May.

Investors await the Fed's Open Market Committee's announcement on interest rates on June 22.

"Investors will be trying to see how far or how high the bar for the next round of quantitative easing will be. If this bar is actually lowered, then I think it will be beneficial for gold," said Ong Yi Ling, investment analyst at Phillip Futures.

"If it is high, then I think gold will still remain in its current range bounds that we are seeing. I don't think they will do QE3 now."

Financial markets are bracing for the conclusion at the end of June of the Fed's quantitative easing, a cheap-money policy credited with boosting stocks but blamed for sky-high commodities prices and a weak dollar.

Gold priced in sterling extended gains to hit a record at £953.41 on Monday, tracking gains in spot gold.

The euro gave up some of the gains it made late last week after euro zone finance ministers said they expected to pay the further €12 billion in emergency loans to Greece by next month.

But euro zone finance ministers also agreed that they would seek a voluntary rollover of Greek debt by private bondholders to finance a substantial part of Greek funding needs in coming years.

Recent gains in gold were driven by debt problems in Europe, inflation fears in China following strong economic data and worries about a US economic slowdown.

"I think to some extent it was expected they won't be able to finalise it so soon because it was a pre-condition that Athens has to introduce all these austerity measures and show a plan of that sustainability before they get their bailout," said Ong of Phillip Futures.

"I think for gold, I would still look at resistance at about the $1,550 to $1,555 level."

Silver was steady at $35.92 an ounce, below a record at $49.51 an ounce in April. Platinum and palladium gained on firm equities.

Stocks in Asia's developed markets rose following a higher close on Wall Street. The MSCI index of shares outside Japan was a shade higher after falling to its lowest level on Friday since late March.

"I think the US will maintain the interest rates at low levels for a little while after the quantitative easing finishes. I can't tell you whether it's going to be bullish or not for gold," said a physical dealer in Hong Kong.

"But I guess gold will be stable until the problem in Greece is solved. There are so many problems to be solved."

Money managers cut their bullish bets in Comex gold futures and options after raising them in the past three weeks, as bullion prices fell during the period, futures regulator Commodity Futures Trading Commission data showed Friday.