Gold price dips as equities recover following Greek vote

By Marcy Nicholson and Jan Harvey

NEW YORK/LONDON (Reuters) - Gold fell more than 1 percent on Monday as traders cashed in gains that took the metal to five-month highs last week, with the wider markets shrugging off news that an anti-austerity party had won elections in Greece.

Greek leftist leader Alexis Tsipras, whose Syriza party swept to victory in a snap election on Sunday, was set to become prime minister of the first euro zone government openly opposed to the bailout conditions imposed by the European Union and International Monetary Fund during the economic crisis.

Greek stocks fell on the news but the broader European share market was firmer, focusing on the positive impact of the European Central Bank's (ECB) bond-buying plan unveiled last week.

Spot gold was down 1 percent at $1,280.80 an ounce by 2:47 p.m. EST (1947 GMT), off an earlier low of $1,275.75. U.S. gold futures for February delivery settled down $13.20, or 1 percent, at $1,279.40.

Gold's rise to its highest price since mid-August last week left it overstretched, analysts said, and the price eased as the uncertainty surrounding the Greek election cleared.

"With the event risk out of the way, now that everyone knows what's going on in Greece, sentiment has calmed somewhat," ABN Amro analyst Georgette Boele said. "The recovery in sentiment is hurting gold prices somewhat."

The euro and European shares and bonds shook off worries on Monday over Greek election winner Syriza's pledge to take on international lenders, a strong sign of confidence in the ECB's new money-printing program.

The single currency rebounded after hitting an 11-year low against the dollar in earlier trade after the election results.

"We are now seeing profit-taking in the wake of the expected victory of the radical left-wing Syriza party in the Greek parliamentary elections," said Commerzbank in a note.

Now that the ECB's bond purchases and the new Greek government, which had buoyed gold prices, have been announced, investors have followed "the old adage of 'buy the rumor, sell the fact,'" Commerzbank said.

CME Group's Asian gold contract began trading in Hong Kong on Monday. The 1 kg physically settled contract was trading at a premium of $2-$3 an ounce over the global benchmark.

The launch of the CME contract within six months of new contracts in Singapore and China underscores a desire in top consuming region Asia to have price benchmarks that reflect regional market dynamics, although liquidity has been a problem.

Meanwhile silver was down 1.9 percent at $17.90 an ounce, while platinum was down 1.1 percent at $1,247.99 an ounce and palladium was down 0.6 percent at $775.72 an ounce.

(Additional reporting by A. Ananthalakshmi in Singapore; Editing by Mark Potter, Greg Mahlich and Marguerita Choy)