Gold down as bargain hunting subsides

But, continued concerns about Greece's debt problems could still boost safe-haven buying

SINGAPORE (Reuters) -  - 

Gold edged down on Friday as early bargain hunting subsided and investors turned to currencies for direction, but concerns about Greece's debt problems could still spur safe-haven buying.

Bullion investors closely watched the dollar index .DXY, which measures the greenback against a basket of six currencies and hovered above the 50 and 100-day moving averages, suggesting sentiments for the U.S. currency remained firm.

Silver, platinum and palladium tracked gold lower.

Spot gold hit an intraday high of $1,126.40 an ounce and was at $1,123.65 by 0308 GMT, down from $1.80 from New York's notional close. Bullion was about 1.8 percent below a 6- week high near $1,150 seen in early March but was heading for its best weekly gain since mid-February.

"The dollar just doesn't seem to be seeing much downside risk at the moment. The dollar doesn't look overbought, technically looks quite strong with it staying above the 50-day moving average," said Mark Pervan, senior commodities analyst at ANZ in Melbourne.

"For that reason, you're getting a bit of sideways movement in the gold price. I just can't see, until we start seeing more negative signals for the dollar, any upside in the gold market."

Fears of financial stability related to uncertainties over Greece's ability to tackle its fiscal crisis have sent gold prices to recent highs. However, a failure to hold the gains and the absence of new inflow into the ETF suggested investors could be shifting some of their money to stocks or bonds.

Gold was about 8 percent below a lifetime high around $1,200 struck in early December.

U.S. gold futures for April delivery fell $2.3 an ounce to $1,125.1 after settling higher on Thursday.

The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings stood at 1,115.511 tonnes as of March 18, unchanged from the previous business day. There has been no change in the holdings since March 10.

The euro recovered on Friday but remained under pressure on renewed concern about Greece after Athens said it may not be able to achieve its promised deficit cuts if its borrowing costs remain so high.

Asian stocks rose on Friday, led by Japanese exporters and consumer-related shares, with investor expectations of a steady economic recovery helping markets close in on a sixth straight week of gains.

"There's a bit of selling from speculators and we are watching the dollar movements. I don't think anybody is taking any positions," a dealer in Hong Kong said.

"People are waiting for more economic data and would like to see how the situation in Greece develops. Physical buyers are not around and there are only speculators buying and selling. It's very boring."

Oil fell below $82 a barrel on Friday, extending the previous day's losses, as the U.S. dollar strengthened against the euro amid worries over Greece's debt woes, and a rise in OPEC exports loomed.

(Editing by Himani Sarkar)

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