Gold eases from three-month high on profit-taking, dollar gains

By A. Ananthalakshmi

SINGAPORE (Reuters) - Gold slipped after a five-day rally on Tuesday on profit-taking and as the dollar regained some ground, with investors looking to the Greek debt crisis for trading cues, as well as the upcoming minutes from the latest Federal Reserve meeting.

Spot gold had dipped 0.3 percent to $1,221.56 an ounce by 0339 GMT, off a three-month high of $1,232.20 reached in the previous session.

The metal had gained for five straight days to Monday after recent data on U.S. jobs, retail sales and consumer sentiment pointed to weakness in the economy and stoked speculation the Fed would not raise rates any time soon.

A drop in holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, to a four-month low of 718.24 tonnes on Monday, also undermined sentiment.

"There is some profit-taking going on after we failed to hold near $1,230 and with the dollar gaining overnight," said a trader in Singapore.

The dollar climbed over 1 percent against a basket of major currencies on Monday on higher U.S. yields and weakness in the euro.

The turning point for prices could come on Wednesday with the release of the minutes of the Fed's last policy meet in April, the trader said.

Markets are closely watching the minutes to gauge central bank officials' thinking on when U.S. interest rates could go higher.

The recent weak data has bolstered views the economy was not recovering strongly enough for the U.S. central bank to raise rates from record lows at its next policy meeting in June.

That view has supported non-interest-paying bullion, which would have seen demand decline with higher rates.

But Chicago Fed President Charles Evans noted on Monday that the central bank could look at a rate hike in June if the economy was strong enough.

Potentially adding to arguments for raising interest rates sooner rather than later was a paper published on Monday by the San Francisco Fed that said the U.S. economy was probably not as weak as current estimates suggest.

Also on the radar was the Greek debt crisis. Greece is near a cash-for-reforms deal with its euro zone partners and the International Monetary Fund that would help it meet debt repayments next month, the country's finance minister said on Monday, as worries persist over a possible bankruptcy.

A default, which could potentially result in Greece exiting the euro zone, could boost safe-have demand for gold.

(Reporting by A. Ananthalakshmi; Editing by Joseph Radford)