Gold steadies after four-day drop, awaits news on Greece

By Jan Harvey

LONDON (Reuters) - Gold steadied on Thursday after four days of losses as traders took to the sidelines to await further news on Greece's negotiations with its creditors, with caution over the metal's longer-term outlook weighing on interest.

Expectations that the Federal Reserve is set to carry out the first U.S. interest rate increase in nearly a decade, boosting the opportunity cost of holding non-yielding bullion, has pressured gold this year, keeping it in a narrow range.

Spot gold was at $1,174.00 an ounce at 1339 GMT, little changed from the previous session, while U.S. gold futures for August delivery were up 30 cents at $1,173.20. Spot prices earlier hit a two-week low of $1,171.02.

Gold has held largely between $1,160 and $1,230 since mid-March, struggling to break higher despite an ostensibly bullish rise in tensions over Greece.

"We would have expected gold to trade much higher, given all the issues in Greece," Commerzbank analyst Daniel Briesemann said. "It's being kept in check by an ongoing withdrawal by speculative financial investors. If this doesn't stop, the gold price won't be able to recover."

Gold has faced additional pressure from a stronger dollar, which hit a two-week high against the euro earlier this week before steadying on Thursday.

European shares trimmed early losses in afternoon trading as talks began in Brussels on a financing-for-reforms deal with Greece to avert a possible debt default.

Greece's international creditors put a final cash-for-reform proposal to euro zone finance ministers on Thursday in a showdown with Athens after lengthy negotiations failed to yield an agreed plan to avert an imminent default.

"We've been hearing about the Greek story for so long that it's no longer big news. People are frustrated with the lack of performance on the part of gold," said Afshin Nabavi, head of trading at MKS.

"We attempted this week to break $1,200 and failed, and that doesn't look so good. With gold, either people wait for it to go much lower so it's a bargain, or for it to get more expensive (so it has investment value). Now, people are waiting for lower numbers to buy."

Silver was down 0.6 percent at $15.83 an ounce, spot platinum was up 0.2 percent at $1,073.24 an ounce, and spot palladium was down 2.4 percent at $679.63 an ounce.

Palladium fell to its lowest since July 2013 at $673.47 an ounce earlier, having broken through key chart support last week. Prices have slid 14 percent so far this year, hurt by perceptions that supply of the white metal is plentiful.

(Additional reporting by Naveen Thukral in Singapore; Editing by Mark Heinrich)