June 27 (Bloomberg) -- Gold declined, after capping the biggest weekly drop in seven weeks, as weaker oil prices and a pledge by European Union leaders to avert a Greek default slashed the metal’s appeal as a haven.
Bullion for immediate delivery declined as much as 0.3 percent to $1,498.15 an ounce and was at $1,500.18 by 3:17 p.m. in Seoul. It plunged 2.4 percent last week, the biggest loss since the week ending May 6. Futures for August delivery were little changed at $1,500.50 an ounce on the Comex in New York.
“In addition to the Greek rescue plan, gold is falling on the back of the strengthening dollar,” said Hwang Il Doo, a senior trader at Korea Exchange Bank Futures Co. in Seoul. “Oil tumbled, lowering inflation pressure.”
EU leaders vowed to help stave off a Greek default as long as Prime Minister George Papandreou pushes through a package of budget cuts this week. European finance chiefs will decide on July 3 whether Greece has met the conditions for its next aid. Greek lawmakers are expected to start a three-day debate today and vote on the austerity measures on June 29.
The dollar gained 0.3 percent against a basket of six major currencies, after rising for three straight weeks, eroding the allure of gold as an alternative investment. Crude oil lost 1.1 percent after falling 2 percent last week, the fourth straight decline, reducing demand for an inflation hedge.
Gold, which has increased 5.5 percent this year, gained as much as 0.2 percent to $1,506.28 an ounce earlier.
“There might be some people who say the correction is done,” said Viral Shah, vice president at Geojit Comtrade Ltd. in Mumbai. “We are at the lower end of the range so probably we will see some bounces. There is a lot of interest to buy gold at lower prices.”
The price reached a record $1,577.57 on May 2 as Greece’s debt crisis and record-low U.S. borrowing costs boosted demand for an alternative to currencies.
Immediate-delivery silver dropped 1.8 percent to $33.68 an ounce after plunging 4.4 percent last week, the fourth straight loss. Cash palladium declined 1.2 percent to $725.50 an ounce and spot platinum decreased 0.9 percent to $1,674.25 an ounce.
--Editors: Jarrett Banks, Ovais Subhani
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