×

Gold settles lower as Greek hopes lift stocks, euro slides

62390896
Getty Images

Gold eased on Tuesday as the euro slid sharply against the dollar, and as stock markets rallied on hopes that Greece would reach a deal with its creditors to stave off default.

Spot gold was down 0.7 percent at $1,176.79 an ounce, while U.S. gold futures for August delivery settled down $7.50 at $1,176.60.

The metal fell for the third straight session, leaving gold vulnerable to pressure from other factors, such as the prospect of the first U.S. interest rate rise from the Federal Reserve in nearly a decade. That would boost the opportunity cost of holding non-yielding bullion.

"There may be a sense of relief (over Greece) feeding into the market as a negative for gold prices in the short term, but that in many respects is a sideshow to the Fed," Standard Chartered analyst Nicholas Snowden said.

Optimism that a deal could still be at hand to stave off a Greek default boosted European shares and kept a floor under U.S. stocks, while the U.S. dollar and bond yields edged higher on expectations of a Fed rate hike this year.

Fed Governor Jerome Powell said he was prepared to raise interest rates twice this year, once in September and once in December, as long as the economy performs as expected. Later in the day, the Atlanta Fed's GDPNow forecast model showed the U.S. economy is on track to grow 2 percent in the second quarter.

Read MoreAsian equities cheer Greece's new reform deal

Strength in the dollar, which is benefiting from upbeat U.S. data, further pressured gold, which is priced in the U.S. unit and tends to gain when the currency is weak.

The euro was down 1.6 percent versus the dollar, on track for its biggest one-day drop in three months.

"Further losses seem likely now for gold, although that being said precious metals look a little bit oversold now while Greece could still default and exit the euro zone, an outcome that would undoubtedly boost the appeal of safe havens," said Fawad Razaqzada, technical analyst for Forex.com.

Read MoreThe Greece market rally is premature: Strategist

Physical gold demand in Asia has been sluggish as monsoon concerns weighed on demand in India and a better-yielding stock market kept buyers away in China.

Silver was down 2.4 percent at $15.72 an ounce, while platinum was up 0.4 percent at $1,061.50 and palladium was up 0.04 percent at $693.75.

Platinum had dropped to its lowest in more than six years on Monday, at $1,053.75 an ounce.