You are here

Gold treads water as strong dollar offsets haven bids from Greek crisis

BLGGOLD.jpg
Gold gave up early gains to trade flat on Monday as a stronger dollar offset safe-haven bids after Greece and its creditors failed to strike a deal to avert a debt default.

[SINGAPORE] Gold gave up early gains to trade flat on Monday as a stronger dollar offset safe-haven bids after Greece and its creditors failed to strike a deal to avert a debt default.

The metal traded in a narrow range as markets waited for a Federal Reserve policy meeting later this week for clues on the outlook for US interest rates.

Spot gold was flat at US$1,181.30 an ounce by 0314 GMT, after earlier climbing to a session high of US$1,186.20. The dollar rose 0.3 per cent against a basket of major currencies.

"Gold has come under pressure in recent weeks on US dollar strength. We expect this to continue over the balance of the year as the market anticipates a rise in US interest rates," Morgan Stanley analyst Tom Price said, adding that clarity on the timing of a rate hike may provide some short-term relief.

sentifi.com

Market voices on:

"Some strengthening in retail appetite for gold is likely as prices approach US$1,100, but the third quarter is a seasonally weak period so there is little prospect of a sustained uptick in the next couple of months," Mr Price said.

Bullion investors were waiting to hear from the US central bank later this week on when it will make its first interest rate hike in nearly a decade.

The Fed will begin its two-day meeting on Tuesday, with a statement to be released on Wednesday.

A rate hike could diminish demand for non-interest-paying gold, while boosting the dollar.

Recent US economic data has been strong, supporting expectations that a rate hike could come before the end of the year, spooking gold investors.

Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, are at their lowest since 2008, having seen more outflows on Friday.

Hedge funds and money managers slashed their net long stance in gold during the week ended June 9, US Commodity Futures Trading Commission data showed on Friday.

Earlier, bullion got some safe-have support from news over the weekend that talks on ending a deadlock between Greece and its international creditors broke up in failure on Sunday, with European leaders venting their frustration as Athens stumbled closer towards a debt default that threatens its future in the euro.

Gold is typically in demand during times of political and financial uncertainty, although gains are often short-lived.

REUTERS

grab

Receive $80 Grab vouchers valid for use on all Grab services except GrabHitch and GrabShuttle when you subscribe to BT All-Digital at only $0.99*/month.

Find out more at btsub.sg/promo

Powered by GET.comGetCom