Gold price steadies as uncertainty over Greece lends support
London (May 29) Gold steadied off the previous session's 2-1/2 week low on Friday, supported by uncertainty over Greece's debt talks, but still under pressure from expectations that a rise in U.S. interest rates may come soon.
The prospect of higher rates, which would boost the opportunity cost of holding non-yielding gold while lifting the dollar, kept the metal on track for a second weekly drop, however.
Spot gold was at $1,188.30 an ounce at 0915 GMT, little changed from late on Thursday, while U.S. gold futures for June delivery were up 30 cents at $1,188.40.
Prices fell to their lowest since May 11 on Tuesday at $1,180.50, hurt by a rise in the dollar, which hit a 12-1/2 year high against the yen.
"While gold hasn't gained much of an upside (from the uncertainty over Greece) ... it hasn't seem much of a downside given the resurgence of the dollar," Standard Chartered's global head of commodities research Paul Horsnall said.
"In those terms, gold has been hanging on there reasonably well. It's one of the few commodities which has managed to hold its value this year in dollar terms."
There were mixed signals this week on the outcome of talks over Greece's debt, without which Athens risks default or bankruptcy in weeks.
A Greek government spokesman said on Thursday that it intended to agree a cash-for-reforms deal by Sunday, even as euro zone officials suggested a deal was far from imminent, and the head of the International Monetary Fund was quoted as saying the country could fall out of the euro zone.
The dollar has been well bid since Federal Reserve Chair Janet Yellen said last week the U.S. central bank was on track to raise rates later this year.
Economic data on Thursday suggested the same thing. Contracts to buy previously owned U.S. homes rose for a fourth straight month in April to a nine-year high, boosting the outlook for the housing market.
Traders were now waiting for U.S. GDP data later in the day.
Gold trading was quiet overnight in Asia, location of the chief physical markets for the metal, dealers said. "The premium in Shanghai moderated marginally, sitting close to $0.50 as USD/CNY ticked back above 6.20," MKS said in a note.
Gold demand across Asia was subdued this week, with premiums in major trading centres failing to rise despite the price drop.
Among other precious metals, silver was up 0.2 percent at $16.71 an ounce, while platinum was up 0.1 percent at $1,115 an ounce and palladium was down 0.7 percent at $777.50 an ounce.
Source: CNBC
