Gold fell to a four-week low on Thursday, extending losses into a third straight session due to a strong dollar and the prospect of higher U.S. interest rates, with the market eyeing U.S. economic data due later in the day for further trading cues.
Spot gold slid to $1,164.25 an ounce, its lowest since June 5, and was trading at $1,164.61 by 0644 GMT. It has lost about 1 percent in the previous two sessions.
The dollar index held near a three-week top hit earlier in the session, supported by strong U.S. private employment data and weakness in the euro after Greece defaulted on a loan repayment to the International Monetary Fund.
With the Greek debt crisis failing to trigger strong safe-haven bids for gold, markets turned their focus to data on U.S. nonfarm payrolls and durable goods due later in the day for clues on the strength of the economy and how that will affect Federal Reserve monetary policy.
"Gold's appeal as a safe-haven asset, clearly, has not really shone through in the past half-week. Not aiding gold's cause has been a rapidly strengthening dollar," said Howie Lee, an analyst at Phillip Futures.
Given the recent strong U.S. economic data, "there may be a good chance gold could further decline today," Lee said.
"We expect a strong U.S. labor market report to send gold prices downwards to $1,150." The ADP National Employment Report on Wednesday showed 237,000 private-sector jobs were created in June, beating the median expectation among economists surveyed by Reuters of a gain of 218,000 jobs.
The gain was the biggest in six months. More encouraging data could prompt the Fed to raise rates sooner rather than later, hurting demand for non-interest-paying bullion. Gold prices have been hamstrung by the prospect of higher U.S. interest rates this year.
The focus in the Greek crisis is on Sunday's referendum. Prime Minister Alexis Tsipras has urged Greeks to reject an international bailout deal, wrecking any prospect of repairing relations with European Union partners before the referendum, which may decide Greece's future in Europe.
There is scope for the Greek crisis to drive more risk-averse money into gold if it worsens to the point where Greece leaves the euro zone, or if there is contagion into other economies in the bloc, such as Italy, Portugal or Spain, traders said. (Reuters)
Source: www.businessworld.ie
