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PRECIOUS-Gold slips with euro in absence of Greek deal, US rate hike signals

Published 13/07/2015, 04:27 pm
© Reuters.  PRECIOUS-Gold slips with euro in absence of Greek deal, US rate hike signals

* Greece needs to push legislation for release of funds

* Yellen says expects rate hike this year

* OCBC Bank sees gold at $1,050 by year-end (Updates prices)

By Manolo Serapio Jr

MANILA, July 13 (Reuters) - Gold slipped on Monday, tracking a softer euro after a

weekend emergency summit to address Greece's debt crisis yielded no deal, while signals the U.S. Federal Reserve was still on track to raise interest rates this year also dragged on prices.

Greece will now be required to push legislation through parliament this week to convince its euro zone creditors to release funds to avert a state bankruptcy and start negotiations on a third bailout programme estimated at up to 86 billion euros ($95.5 billion). ID:nL5N0ZS09X

The news weighed on the euro, making dollar-denominated assets such as gold more costly for holders of other currencies.

Spot gold XAU= was off 0.3 percent at $1,159.90 an ounce by 0604 GMT, after falling for a third straight week.

Also a drag on gold were signals from Federal Reserve Chair Janet Yellen on Friday suggesting the U.S. central bank is on course to raise interest rates within this year. ID:nL1N0ZQ1D4

Expectations that the Fed would lift interest rates at some point this year have weighed on bullion prices, which touched a four-month low last week. It has been largely on a decline since hitting a high of $1,232 in mid-May.

"We are bearish toward gold prices and the underlining factor for this is our expectation that the Fed will raise interest rates by the third quarter," said OCBC Bank analyst Barnabas Gan, who sees gold at $1,050 by year-end.

Gan said the Fed rate hikes could be a "minimum of one, maximum of two" this year, depending on how the U.S. labour market fares.

Yellen said that while the U.S. economy should grow steadily for the remainder of the year, allowing the Fed to move with its first rate hike in nearly a decade, she stressed that U.S. labour markets remain weak and that more workers could be encouraged back into the job market with stronger growth.

Hedge funds and money managers bailed out of COMEX gold and silver futures and options at the fastest pace in at least a year in the week to July 7, at the height of the commodities market's biggest rout in years, data showed. ID:nL1N0ZQ28M

Physical demand for gold was tepid last week as prospective investors in China chased bargains in equities after a market selloff, while those in India delayed purchases. GOL/AS

U.S. gold for August delivery GCcv1 was up 0.1 percent at 1,159.20 an ounce. Spot silver XAG= , palladium XPD= and platinum XPT= fell around 1 percent each. (Editing by Joseph Radford and Himani Sarkar)

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