Gold retains gains near $1,185 on safe-haven bids over Greece

SINGAPORE (Reuters) - Gold was trading firmly near $1,185 an ounce on Tuesday, clinging to overnight gains as Greece's failure to strike a deal with its creditors triggered safe-haven bids.

FUNDAMENTALS

* Spot gold was steady at $1,184.78 an ounce by 0025 GMT, after gaining 0.5 percent on Monday.

* Greece and its creditors hardened their stances on Monday after the collapse of talks aimed at preventing a default and possible euro exit, prompting Germany's EU commissioner to say the time had come to prepare for a "state of emergency".

* Athens now has just two weeks to find a way out of the impasse before it faces a 1.6 billion euro repayment due to the International Monetary Fund, potentially leaving it out of cash, unable to borrow and dangling on the edge of the currency area.

* Stock markets around the world fell on Monday, pressured by the collapse of 11th-hour talks between the near-bankrupt Greece and its creditors, with investors worried about the possibility the country could default.

* Gold was well-bid as it is often seen as an alternative investment during times of financial and economic uncertainty.

* Also in focus this week is the Federal Reserve's two-day policy meeting that kicks off on Tuesday.

* Investors will be closely monitoring comments from the Fed chair Janet Yellen on when the U.S. central bank could raise interest rates, which are currently near record lows.

* Higher rates would diminish demand for non-interest-yielding bullion.

* SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.30 percent to 701.90 tonnes on Monday, the lowest since 2008. Persistent outflows can undermine any rally in prices.

* For the top stories on metals and other news, click [TOP/MTL] or [GOL/]

MARKET NEWS

* Asian stocks were subdued early on Tuesday as financial markets braced for the possibility of Greece defaulting on its debt, while a two-day policy meeting of the Fed's monetary committee starting later in the session also counselled caution. [MKTS/GLOB]

(Reporting by A. Ananthalakshmi; Editing by Ed Davies)