PRECIOUS-Gold turns down as Greek accord is drafted, 4th weekly drop – by Marcy Nicholson and Clara Denina (Reuters U.K. – February 20, 2015)

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NEW YORK/LONDON, Feb 20 (Reuters) – Gold turned lower in choppy dealings on Friday, flirting with a seven-week low after the euro zone discussed extending the Greek bailout by just four months, while prices headed for their fourth straight weekly drop.

A draft text on extending Greece’s bailout from its international creditors proposes prolonging the program by four months rather than a previously suggested six, officials from Greece and other euro zone states said on Friday.

Spot gold turned down 0.7 percent at $1,198.55 an ounce by 2:49 p.m. EST (1949 GMT). The metal has lost 2.5 percent so far this week, dipping to its lowest in six weeks at $1,197.56 on Wednesday, when hopes for a successful resolution to Greece’s debt talks boosted investor appetite for risk.

U.S. gold futures for April delivery settled down $2.70 an ounce at $1,204.90 on the day. “Overall, gold is lower as the market grows increasingly optimistic about a positive resolution, hence less need for a safe haven investment,” said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York.

The euro traded near session highs against the U.S. dollar after the Greek bailout was drafted.

Traders were set to focus on the U.S. Federal Reserve and its monetary policy for clues on a possible interest rates hike by June, despite caution evident in the minutes from the latest Fed policy meeting.

Any hike by the Fed, which has kept rates near zero since 2008 to stimulate the U.S. economy, could hurt demand for non-interest-bearing bullion.

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