Gold price flat as dollar offsets weak shares, still set for weekly gain
New York (Jun 12) Gold was little changed on Friday as the impact of a stronger dollar and signs of increased momentum in the U.S. economy was offset by lower equities and uncertainty over the Greece crisis.
Bullion was however heading for its first weekly rise in four, capitalising on gains made earlier in the week, when the dollar was weaker and worries increased over Greece.
Spot gold, lower initially, was unchanged at $1,181.60 an ounce by 1413 GMT, while U.S. gold futures for August delivery were up $1.10 at $1,181.40 an ounce.
A stronger dollar, up 0.2 percent against a basket of leading currencies, weighed on gold, making it more expensive for holders of other currencies.
Data on Friday showed U.S. producer prices in May recorded their biggest increase in more than 2-1/2 years, while U.S. consumer sentiment rose more than expected in June.
A firming economy could likely prompt the Federal Reserve to raise interest rates in September, which would boost the dollar further, in turn denting demand for non-interest-paying bullion.
"The weakness we saw in gold starting last week was due to great jobs numbers out of the U.S.," ING Bank senior strategist Hamza Khan said.
"We expect a single rate hike in 2015, the million dollar question is whether a rate hike will be able to push it below $1,150."
The market was waiting for more U.S. data and the U.S. Federal Reserve's Open Market Committee meeting next week.
However, the metal gained some support from lower global equities and deteriorating Greek debt talks. Greece said it would not cross its "red lines" as it looked to intensify political negotiations for an agreement, saying a decision by the International Monetary Fund (IMF) to leave negotiations on Thursday was designed to put pressure on Athens.
"The perception is that Europe can handle a Greek default better than it would have in 2010, when gold fell on the back of the unfolding of the Greek crisis and the fear of contagion to other periphery countries," Natixis analyst Bernard Dahdah said.
Gold is usually seen as a hedge against political and financial risk, although the impact on demand from wider political concerns is usually short lived.
Weak physical demand and outflows from exchange-traded funds continue to undermine gold prices, traders said.
Earlier this week, assets of the world's top exchange-traded gold fund hit their lowest since September 2008, the month Lehman Brothers filed for bankruptcy.
Silver was down 0.9 percent at $15.89 an ounce, while platinum fell 0.6 percent to $1,095 an ounce and palladium lost 0.8 percent to $737.25 an ounce.
Source: Reuters
