Gold cuts losses, eyes on Greece

Gold cut losses to trade steady on Friday as the dollar weakened and the Greek debt crisis raised risk aversion, which could still spur safe haven buying.

Spot gold was around USD1,527.70 an ounce by 1330 GMT compared with USD 1,528.35 late in New York on Thursday. It is heading for its second consecutive weekly drop.
Greek Prime Minister George Papandreou sacrificed his finance minister on Friday and put his main socialist party rival into the job in a bid to force through an unpopular austerity plan to avert bankruptcy.
In Berlin, the leaders of Germany and France, Europe's two central powers, called for a quick deal on a second bailout for Greece with voluntary involvement of private bondholders, in accord with the European Central Bank.
"I'm still pretty convinced gold will hold up. The risk sentiment is not good, it's very sour," VTB Capital analyst Andrey Kryuchenkov said. "The only key downside risks I see for gold is the Fed turning outright hawkish, which is unlikely in the near term and a sudden improvement in risk sentiment."
The euro rose on hopes for a new Greek aid package and as Germany vowed to work with the European Central Bank to resolve the crisis, although the currency remained vulnerable if there was no concrete solution.
European Commission President Jose Manuel Barroso called on Friday for Greek politicians to support reforms, saying the country itself and the European Union must both work to preserve financial stability.
Gold is some 3% below a lifetime high around USD 1,575 touched in early May. Recent gains were driven by debt problems in Europe, inflation fears in China following strong economic data, and worries about a US economic slowdown.

Investors await the US Federal Reserve's Federal Open Market Committee's announcement on interest rates on June 22.

The Fed last November announced a programme to buy USD 600 billion in Treasuries to help push long-term interest rates lower and stimulate the economy. That programme will end June 30.
The physical market saw sales of gold scrap, while top consumer India was in a lean spell as farmers were busy sowing seeds during the monsoon season.
"Gold prices remain supported by the macro environment despite seasonal weakness," Barclays Capital said in a note.
Holdings of the largest silver-backed exchange-traded fund (ETF), New York's iShares Silver Trust, fell 0.27%  from Wednesday to Thursday, while, the largest gold-backed ETF, New York's SPDR Gold Trust, remained unchanged for the same period.
Silver was at USD 35.37 from USD 35.48 an ounce. Platinum was down at USD 1,743.99 an ounce from USd 1,752.20. Palladium was at USD 750.75 an ounce from USD 752.40. For the week, palladium was down more than 6%.
"The PGMs have been caught between supply side constraints and physical demand, from China in particular, providing support on the downside but a demand slowdown capping the upside," Barclays Capital said.