NEW YORK/LONDON (Reuters) - Gold fell slightly in lackluster, post-holiday trade after touching its highest price in nearly four weeks on Tuesday, as new hopes for a debt bailout for Greece restored confidence in riskier assets.
There was plenty of interest on both sides. These days, some investors are seeking a safe haven asset, while others are looking for the so-called risk-on trade, analysts said.
"You have the fight-to-quality camp, but those investors are disappointed today coming back from a long weekend and seeing the euro up over a full penny," said Adam Klopfenstein, Senior Market Strategist at Lind-Waldock in Chicago.
"There will be some buying from investors looking for the risk-on trade, when all commodities rally along with equities," he added.
Upon reopening from the U.S. Memorial Day and a UK bank holidays, spot gold rose to an early high of $1,540.50 per ounce, its loftiest since May 4, but pulled back to $1,534.40 by 3:26 p.m. EDT (2026 GMT). It finished Monday at $1,537.95.
Benchmark August COMEX futures lost 50 cents to close at $1,536.80 per ounce. The outgoing June gold contract settled 40 cents lower at $1,535.90 an ounce.
For the month, gold is down 1.82 percent, hanging below a lifetime high at $1,575.79 touched early in the month. Although it has been a beneficiary of investor nervousness over Greece, it has struggled to retain gains.
The Wall Street Journal reported Germany was considering dropping its push for an early rescheduling of Greek bonds in order to facilitate a new package of aid loans to prevent Athens from defaulting on its debt.
A drop in the dollar did little to spur demand for gold, but helped to buffer the downside. Gold usually moves inversely to the U.S. currency, but the improved risk appetite left bullion somewhat sidelined.
"At least to some degree, the sovereign debt issues with Greece and the other peripheral EU countries have been pretty well documented, so it's not necessarily a surprise for the market," HSBC analyst James Steel said.
"Gold has been rallying since the middle of May and is actually some 60-odd dollars higher from the recent low, so it hasn't done too badly."
Gold's losses were minimized by buying elsewhere in commodity markets and in equity markets, which were lifted by prospects of financial aid for Greece even as disappointing data on U.S. home prices, consumers and regional manufacturing raised concerns that the U.S. economy's soft patch could become protracted.
GOLD STILL SOUGHT
Recent increases in risk aversion have translated into greater interest in owning gold, as reflected in last week's net rise in global holdings of the metal in the world's largest exchange-traded funds, the first weekly gain in a month.
Gold holdings are down by more than 500,000 ounces this month and down 0.68 percent year-to-date, but bullion ETFs have lured more cash in May than other precious metals.
Data from the U.S. Commodity Futures Trading Commission showed that speculators raised their gold holdings for the first time since mid-April last week, bringing futures open interest to its highest since April 19.
Silver ended up 1 percent at $38.40 an ounce. Despite the day's gains, silver was down about 20 percent in May -- its biggest monthly decline since August 2008 -- after setting a record $49.51 in April.
Platinum fetched $1,825.05 an ounce, well above $1,796.35 previously, while palladium rose about 3 percent to $775.75.
This month, platinum fell nearly 2.5 percent and palladium off almost 2 percent.
(Additional reporting by Lewa Pardomuan in Singapore; editing by Dale Hudson)