Gold was hovering near the key $1,200-an-ounce level on Monday, its lowest in seven weeks, as support for the safe-haven metal eased after a deal was struck over Greece’s debt, while the absence of major consumer China also took a toll.

Spot gold was little changed at $1,201.98 an ounce by 0039 GMT, after dropping to $1,197.95 in the previous session. The metal also recorded its fourth straight weekly decline on Friday.

Euro zone finance ministers had reached an agreement on Friday to extend heavily indebted Greece’s financial rescue by four months, officials on both sides said.

An agreement removes the immediate risk of Greece running out of money next month and possibly being forced out of the single currency area. It provides a breathing space for the new leftist-led Athens government to try to negotiate longer-term debt relief with its official creditors.

Bullion had seen some safe-haven bids as the uncertainty over Greece clouded market sentiment for most of last week, though that was offset by a stronger dollar and robust US economic data.

Public holidays in No. 2 gold consumer China due to the Lunar New Year also put some pressure on prices. Chinese buying typically provides a floor for falling prices.

The dollar index gained on Monday, hurting gold’s appeal as a hedge and making the metal more expensive for holders of other currencies.

The greenback has been robust in recent months on expectations the Federal Reserve would soon raise rates on the back of a strong economic recovery in the United States.

Investors remain cautious about gold’s price outlook. Hedge funds and money managers cut their bullish stance in gold futures and options for the third straight week, taking it to a six-week low in the week to February 17, US Commodity Futures Trading Commission data showed on Friday.

However, holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.23 per cent to 771.25 tonnes on Friday — its second straight day of inflows.

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