Gold price settles lower as Greek hopes lift stocks, euro slides
New York (Jun 23) Gold eased on Tuesday as the euro slid sharply against the dollar, and as stock markets rallied on hopes that Greece would reach a deal with its creditors to stave off default.
Spot gold was down 0.7 percent at $1,176.31 an ounce, while U.S. gold futures for August settled down $7.50 at $1,176.60.
The metal posted its biggest one-day loss in nearly a month on Monday as a rally in stock markets driven by expectations of a Greek deal sent last week's rise into reverse.
That leaves gold vulnerable to pressure from other elements, such as the prospect of the first U.S. interest rate rise from the Federal Reserve in nearly a decade. That would boost the opportunity cost of holding non-yielding bullion.
"There may be a sense of relief (over Greece) feeding into the market as a negative for gold prices in the short term, but that in many respects is a side-show to the Fed," Standard Chartered analyst Nicholas Snowden said.
Signs that an agreement between Greece and its creditors could be close lifted global shares on Tuesday, though the euro fell against the dollar as some euro zone leaders warned that much work remains to be done.
"It's always hard to know exactly how much gold prices are being supported by events in Greece, but we definitely saw yesterday that when you take away some of that immediate risk, the risk premium comes out of the market pretty quickly," Natixis analyst Nic Brown said.
Strength in the dollar, which is benefiting from upbeat U.S. data, further pressured gold, which is priced in the U.S. unit and tends to rise when the currency is weak.
The euro was down 1.7 percent versus the dollar, on track for its biggest one-day drop in three months.
Some support came from a 3.58 ton inflow into the world's largest gold-backed exchange-traded fund, the New York-listed SPDR Gold Shares.
Read More › The Greece market rally is premature: Strategist
Physical gold demand in Asia has been sluggish as monsoon concerns weighed on demand in India and a better-yielding stock market kept buyers away in China.
Silver was down 1.6 percent at $15.81 an ounce, while platinum was up 0.5 percent to $1,062.50 and palladium was up 0.1 percent at $694.
Platinum had dropped to its lowest in more than six years on Monday, at $1,053.75 an ounce.
Source: CNBC
