Gold Price Higher as Dollar Weakens Against the Euro

New York (Jun 2)  Gold prices edged higher Tuesday, boosted by a weaker dollar.

Gold for August delivery, the most actively traded contract, was recently up 0.4% at $1,193.40 a troy ounce on the Comex division of the New York Mercantile Exchange.

The possibility of a deal between Greece and its creditors boosted the euro against the dollar Tuesday, with the single currency gaining 1.9% to $1.1135, its highest level in almost two weeks. Stronger-than-expected eurozone consumer price data for May helped the euro extend its gains. A softer dollar is good news for gold, which is priced in the U.S. currency and becomes more affordable for foreign buyers when the dollar weakens.

”The falling dollar has been the main mover for gold today,” said  George Gero, a senior vice president with RBC Capital Markets Global Futures. “There is a good potential for a Greek deal this week, which would signify more euro strength and more upside for gold.”

Uncertainty about the U.S. economy’s strength and the timing of a rate increase from the Federal Reserve have buoyed gold prices in recent weeks. The latest data have shown an uneven recovery, with manufacturing ramping up but inflation continuing to fall short of the Fed’s target. Higher rates are expected to weigh on gold, which pays its holders nothing and struggles to compete with yield-bearing investments when borrowing costs rise.

Source: WSJ