Gold prices boosted by Greek exit fears

London (Apr 27)  Gold prices were higher on the London spot market on Monday, as concerns over the future of Greece within the eurozone stepped up a gear.

Spot gold was up 0.3 per cent at $US1,182.55 a troy ounce in morning European trade  --  rebounding from a one-month low in the previous session at $US1,175.38 an ounce.

However, the Greek crisis is only seen likely to provide short-term price support.

"While likely lending short-term support to gold, only a flaring up of the eurozone debt crisis should have the potential to trigger broad-based safe-haven demand and support gold beyond the short-term," Julius Baer commodity analyst Carsten Menke said.

Longer term, the continuing economic recovery, the likelihood of a Federal Reserve interest rate rise and the largely stronger dollar mean the firm remains bearish on gold, said Mr Menke.

The Federal Open Market Committee meeting that kicks off Tuesday is expected to support gold, according to some market participants.

"Given how dollar bears have been putting on muscle lately while a recent string of weak economic data has seen more doves than hawks fluttering from the FOMC camp, we are inclined to believe that the chance of a gold rally this week is higher than that of a dip," said Howie Lee, an investment analyst at Phillip Futures.

The precious metals were split at the start of the week, with spot silver up 0.8 per cent at $US15.837 an ounce, while spot platinum was down 0.1 per cent at $US1,119 an ounce and spot palladium was down 0.5 per cent at $US766.50 an ounce.