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By Bloomberg

Gold held a two-day decline on speculation that European officials will break a months-long impasse in talks over a Greek bailout, reducing demand for a haven. Platinum traded near a six-year low.

Bullion for immediate delivery was at $1,186.54 an ounce at 11:26 a.m. in Singapore from $1,185.98 on Monday, when prices sank as much as 1.5 percent, the most since May 26, according to Bloomberg generic pricing. The metal capped the first back-to- back drop since June 12 on Monday. Prices in Shanghai fell the most in a month.

Gold is little changed this year as investors assessed when the U.S. would increase rates as the economy improves and amid prolonged talks on a Greek bailout. Euro-area leaders gave Greece 48 hours to make the final push needed to satisfy creditors and end a five-month standoff over aid. In the U.S., employment gains, rising incomes and cheap borrowing costs propelled sales of existing homes to the highest since 2009, a report on Monday showed.

“I expect a deal to be reached,” said Jordan Eliseo, chief economist at Australian Bullion Co. in Sydney, referring to the bailout talks. “Most market participants are still expecting a Fed hike and subsequent further dollar strength,” he said by e-mail.

The Bloomberg Dollar Spot Index advanced 0.4 percent on Tuesday to head for a third straight session of gains. Higher borrowing costs curb gold’s allure because the metal doesn’t pay interest or give returns like other assets, such as bonds and equities.

Getting Serious

European leaders agreed that Greece’s government was finally getting serious about striking a deal after it submitted a set of reform measures that began to converge with the terms demanded by creditors. They agreed to step up the pace of negotiations to secure a breakthrough on Wednesday that leaders can sign off at the end of the week.

Morgan Stanley sees bullion at $1,165 in the third quarter and $1,180 in the fourth, according to a report dated June 22. While a lack of inflation and robust economic activity in the U.S. are bearish for gold, the Fed is unlikely to start raising rates before December, analysts Tom Price and Joel Crane wrote.

Gold futures for August delivery climbed 0.2 percent to $1,186.30 an ounce on the Comex in New York after slumping as much as 1.7 percent on Monday, the most since May 19. Bullion of 99.99 percent purity retreated as much as 1.1 percent to 236.80 yuan a gram ($1,186.17 an ounce) on the Shanghai Gold Exchange, the most since May 20, and traded at 237.20 yuan.

Silver for immediate delivery slid 0.5 percent to $16.1348 an ounce. Platinum rose 0.7 percent to $1,069.45 an ounce, trading near a six-year low of $1,058.93 reached a day earlier. Palladium added 0.7 percent to $701.10 an ounce after touching $691 on Monday, the lowest since September 2013. The metal tumbled into a bear market last week amid ample global supplies.