Gold has continued its decline beneath $1200 as Greece optimism saps demand for safe haven assets.

Since hitting 2015 highs in January, the yellow metal has struggled to keep its head above the $1200 level. A combination of a strong dollar, improving economic conditions and a reduction in geopolitical risks has improved investor sentiment, and lessened their need to hold gold.

The Chinese stock market rally has also dampened gold investment demand as investors sell existing assets to jump into the stock market bonanza. China accounted for roughly 32% of global demand in the first quarter of 2015.

“Gold has absorbed a lot of ‘bad’ news recently and we wonder just how much lower the market is likely to go. Physical EM (emerging market demand) still appears sluggish. This opens the way for lower prices but we think declines may be modest” Said James Steel of HSBC in a research note.

The prospect of a US rate hike is likely to cause further downside in gold. In the run up to the first hike, the dollar is likely to strengthen and gold, being dominated in dollars, is likely to suffer.

Although most factors are pointing to a falling gold price, India may step in to take up any slack left by China. India is responsible for around 25% of global and demand and the government has just loosened restrictions on imports. Some hope the increased demand for gold in India will be sufficient to lift gold prices but demand has so far been somewhat lacklustre.