Gold rallies for fourth day as Greek talks break down

SINGAPORE (Reuters) - Gold extended gains to a fourth straight session on Tuesday, underpinned by safe-haven bids after talks between Greece and its creditors broke down.

Spot gold rose 0.1 per cent to US$1,232.50 an ounce by 0028 GMT. The metal has gained about 1 per cent in the last three sessions to Tuesday.

Talks between Greece and euro zone finance ministers over the country's debt crisis broke down on Monday when Athens rejected a proposal to request a six-month extension of its international bailout package as "unacceptable".

Dutch Finance Minister Jeroen Dijsselbloem, who chaired the meeting, said Greece had until Friday to request an extension, otherwise the bailout would expire at the end of the month.

The unexpectedly rapid collapse raised doubts about Greece's future in the euro zone after a new leftist-led government vowed to scrap the 240 billion euro (S$369.27 billion) bailout, reverse austerity policies and end cooperation with European Union/International Monetary Fund inspectors.

Investors typically seek safety in bullion during economic uncertainties, and when riskier assets such as equities take a hit.

US stock futures and the euro tumbled in early Asian trade on Tuesday after the Greek debt talks broke down.

Gains in gold were capped by a strong dollar, which makes the greenback-denominated metal more expensive for holders of other currencies.

Bullion traders were also wary of liquidity this week. US financial markets were closed on Monday for a public holiday, while much of Asia will be closed later this week for the Chinese New Year.

Buying from China, the second biggest bullion consumer, has been supportive of gold prices in the run up to the holiday, when the yellow metal is bought widely for gift-giving. Support from Chinese consumers post-holiday could weaken.