London - Gold eased on Monday, giving up some of the previous session's sharp short-covering gains, but uncertainty over the prospect of fresh elections in Greece kept the metal underpinned near $1,200 an ounce.
Greek lawmakers failed to elect a new president in a final round of voting on Monday, leaving it facing a snap election that could derail the international bailout programme it needs to keep paying its bills.
That knocked European stocks lower, while pushing up Greek government bond yields.
Spot gold was down 0.2 percent at $1,192.45 an ounce by 1104 GMT, after a gain of 1.8 percent on Friday, when it had touched $1,199, its highest since Dec. 22 and its biggest one-day jump in 2-1/2 weeks.
Bullion's rise came in thin market conditions due to the Christmas and year-end holidays and it was unclear whether the last session's gains would be maintained when trading picked up again.
“Friday's sharp move was a typical non liquidity move, so naturally enough it gives back a bit today,” Saxo Bank's head of commodity research Ole Hansen said. “We are less than 1 percent away from where we finished a year ago, and I do not think we will sway much away from current prices.”
“(The news from Athens) raises the risk of Grexit (Greek euro exit) once again - not the best climate for Europe to begin the new year,” he added. “That could provide some support (to gold), although we need traders willing to put on risk and they are currently missing.”
U.S. gold futures for December delivery were down $2.80 an ounce at $1,192.50.
Bearish sentiment in the bullion market was evident in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund. The fund's holdings fell 0.08 percent to 712.30 tonnes on Friday, a six-year low.
Demand for the metal was soft overnight in Asia, the primary market for physical gold dealing.
“The premium on the Shanghai Gold Exchange was rather uninspiring, trading between par and $1 above spot for most of the day,” MKS said in a note.
However, China's gold imports from Hong Kong in November rose to their highest level since February, indicating strong demand in the world's top bullion consumer ahead of the Lunar New Year.
Silver was up 0.6 percent at $16.11 an ounce, while platinum was up 0.1 percent at $1,212 an ounce and palladium was down 0.7 percent at $809 an ounce.
Reuters