Gold Falls as Rising Dollar Damps Demand; Greek Crisis Weighed
(Bloomberg) - Gold dropped as the dollar strengthened and investors assessed the developments in Greece’s debt crisis. Palladium sank to the lowest level in almost two years.
Bullion for immediate delivery fell as much as 0.3 percent to $1,176.59 an ounce before trading at $1,177.95 by 10:56 a.m. in Singapore, according to Bloomberg generic pricing. The metal, which rallied as much as 1.1 percent to $1,188.23 on Monday amid concern Greece’s euro membership was in jeopardy, is headed for a fourth straight quarterly decline.
Gold fell 0.6 percent this year as investors focused on when the Federal Reserve will start to raise rates amid the deadlock over Greece. The indebted nation shut banks and curbed the flow of money out of the country in a move that may deepen its recession and risk driving it toward an exit from the euro. Higher rates and a stronger dollar reduce the appeal of gold, which generally offers returns only through price gains.
“Gold has for quite some time lost its appeal as a safe haven in the context of a rising U.S. rate outlook,” said Mark Keenan, head of commodities research for Asia at Societe Generale SA in Singapore. “Any strength during this period should be sold,” he said, predicting that prices will average $1,050 in the final three months of 2015.
The Bloomberg Dollar Spot Index added 0.2 percent on Tuesday, extending this year’s increase to 4.2 percent. While gold’s fourth consecutive quarterly loss is the longest slump
since 1997, declines have been muted. The metal fell 0.5 percent this quarter and the drop in the first three months was less than 0.1 percent.
“Gold is being held back by the continued focus on the Fed, and the expected liftoff in the federal funds rate,” said Jordan Eliseo, chief economist at Australian Bullion Co. in
Sydney. “This, alongside any potential strength in the U.S. dollar, will act as headwinds for gold for some time.” Contracts to purchase previously owned U.S. homes rose in
May to a nine-year high, indicating recent strength in the real-estate industry will be sustained and backing the case for higher borrowing costs.
Bullion for August delivery fell 0.2 percent to $1,176.40 an ounce on the Comex in New York. Metal of 99.99 percent purity lost as much as 0.3 percent to 234.80 yuan a gram ($1,176.63) on the Shanghai Gold Exchange before trading at 235.25 yuan.
Silver for immediate delivery dropped 0.8 percent to $15.6499, extending this quarter’s slump to 6.1 percent.Platinum retreated 0.1 percent to $1,080.45 an ounce, declining
5.4 percent in the past three months for a fourth quarterly loss, the longest run since 2011. It reached a six-year low of $1,058.93 last week and tumbled 11 percent this year.Palladium slid as much as 0.4 percent to $665 on Tuesday, the lowest since July 2013, and was at $666.10. Ample global supplies pushed the metal into a bear market this month and are spurring the first back-to-back quarterly decline since September 2011.