Gold Price Ends Lower On Greek Deal Optimism
Washington (Jun 23) Gold futures dropped for a third straight session to end at a two-week low on Tuesday, as expectations that Greece is nearing a deal with its international creditors strengthened and is likely to avoid a default. Investors also weighed some soft manufacturing data out of China and some mixed economic data from the US with new orders for durable goods dropping more than expected.
In some soft economic news from China , the latest Flash Manufacturing PMI for June showed contraction albeit at a slower pace. The sector showed signs of improvement as output stabilized amid a slight pick-up in total new work and purchasing activity rising slightly over the month. The data also evidenced the sector has lost growth momentum in the second quarter as a whole.
Meanwhile, new home sales in the US showed a further upside in May to reach its highest level in over seven years, while new orders for US manufactured durable goods fell more than expected in May with orders for transportation equipment dropping steeply.
Greece's international creditors are in the process of scrutinizing fresh reform proposals submitted by Greece on Monday, to weigh the scope for reaching an agreement in the Eurogroup meeting scheduled for Wednesday. Nonetheless, 'Grexit' worries refuse to die down as voices of dissent can be heard in Athens even from within the ruling party, over more concessions being offered.
The proposals from Greece were received positively by creditors who said work will commence immediately with the aim of reaching a deal later this week, suggesting that an end to a five-month long deadlock over releasing bailout aid to the cash-strapped country may be near.
Gold for August delivery, the most actively traded contract, dropped USD7.50 or 0.6% to settle at USD1,176.60 an ounce, on the Comex division of the New York Mercantile Exchange on Tuesday. This was the lowest settlement since June 8 .
Gold for August delivery scaled an intraday high of USD1,187.70 and a low of USD1,175.70 an ounce.
On Monday, gold prices dropped USD17.80 or 1.5%, to settle at USD1,184.10 an ounce, on its waning safe haven appeal as investors opted for the riskier equity assets on easing concerns over a Greece default on its sovereign debt.
Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, moved up to 705.47 tons on Tuesday from its previous close of 701.90 tons.
The dollar index, which tracks the US unit against six major currencies, traded at 95.44 on Tuesday, up from its previous close of 94.32 on Monday in late North American trade. The dollar scaled a high of 95.64 intraday and a low of 94.30.
The euro trended lower against the dollar at USD1.1164 on Tuesday, as compared to its previous close of USD1.1340 in North American trade late Monday. The euro scaled a high of USD1.1347 intraday and a low of USD1.11136 .
In economic news, a Commerce Department report on Tuesday showed new home sales with a further upside in May to reach its highest level in over seven years, after reporting a sharp jump in US new home sales in the previous month. New home sales in May climbed 2.2% to an annual rate of 546,000 after surging 8.1% to the revised April rate of 534,000. Economists expected new home sales to rise to a rate of 525,000 from the 517,000 originally reported for the previous month, reflecting a 1.5% increase.
Separately, another the Commerce Department report on Tuesday showed new orders for US manufactured durable goods fell more than expected in May, with orders for transportation equipment showing another steep drop. Durable goods orders tumbled 1.8% in May following a revised 1.5% decrease in April. Economists expected orders to dip by 0.6% compared to the 1.0% drop reported the previous month.
Elsewhere, the Chinese manufacturing sector continued to contract in June, albeit at a slower pace, HSBC Bank said Tuesday. The preliminary PMI score for June came in at of 49.6, a three-month high for the index. The reading also topped expectations of 49.4 and was up from 49.2.
Eurozone private sector growth hit a four-year high in June, reflecting broad-based upturn in services and manufacturing sectors, preliminary data from Markit Economics showed. The flash composite output index rose unexpectedly to a 49-month high of 54.1 in June from 53.6 in May. It was expected to ease slightly to 53.5.
British manufacturers reported a fall in orders for June largely due to some sluggish export demand, the latest Industrial Trends Survey from the Confederation of British Industry showed Tuesday. About 26% said total order books were below normal and 19% said they were above, giving a rounded balance of -7% in June. Economists had forecast a positive balance of 2%.
Source: RTTnews
