Investing.com - Gold prices rose slightly in early Asia on Tuesday with the focus on Greece's ability to negotiate with creditors ahead of major debt payments in the coming month.
On the Comex division of the New York Mercantile Exchange, gold futures rose 0.12% to $1,195.10 a troy ounce. Elsewhere, silver for May delivery gained 0.07% to $15.900 a troy ounce.
Copper for May delivery was flat at $2.725 a pound.
Overnight, gold futures plunged on Monday amid a stronger dollar, as traders digested an unexpected stimulus measure in China and continued uncertainty of a Greek departure from the euro zone.
Speaking at a conference in Washington on Saturday involving the world's top finance ministers, European Central Bank president Mario Draghi rejected speculation that Greece may be forced to abandon the euro. The comments came after reports surfaced last week that Greece could be exploring a contingency plan on how to proceed if it fails to receive critical aid from its euro zone creditors, which is deemed necessary for it to stave off bankruptcy.
In addition, officials in Athens on Monday reportedly issued a decree to local governments forcing them to transfer all cash balances to the Greek Central Bank, in advance of a €770 million obligation due to the International Monetary Fund in May. The effort could raise about €2 billion, according to multiple reports.
Over the weekend, the People's Bank of China attempted to place a floor on the sell-off by lowering its reserve requirement ratio (RRR) for banks by 1% from 19.5 to 18.5%. The stimulus measure could release approximately one trillion yuan or $160 billion in liquidity, according to analysts.
In February, gold prices rose modestly by $4.20 or 0.33% to 1,265.30 an ounce on Feb. 4, after the Bank lowered the RRR from 20% to 19.5%. The reserve requirement for Chinese banks peaked above 21% in 2011 and stayed flat at 20% for a period of three years from 2012 through 2014, before the recent easing measures.
The Chinese Central Bank is looking to jumpstart the economy following a rash of soft data in recent weeks. Last week, China announced that exports for March fell by 15% on a year-over-year basis, while imports declined by 12.7%. For the first quarter, the Chinese economy expanded by 7.0% -- its slowest pace of growth since the Financial Crisis.
Last year, China's gold consumption dipped 24.7% to 886 tonnes, although Chinese output rose by 5.5%, according to the China Gold Association. China is the largest producer of gold in the world and the second-largest purchaser.
The latest monetary policy measures from China have fueled speculation that another rate cut could be imminent. Chinese stocks rallied in November when the Bank slashed its benchmark interest rate for the first time in two years. China lowered interest rates again in February by 25 basis points to 5.35%.
Gold struggles to compete with high yield bearing assets in high interest rate environments.