Good results....Bad Gold Price....1050 by year end????? Gold price slips on dollar after Greek debt deal, U.S. rate rise signals
London (July 13) Gold slipped almost 1 percent on Monday as the dollar rose against the euro after euro zone leaders agreed a roadmap to a bailout for Greece, while signals the Federal Reserve was still on track to raise rates this year also weighed on prices.
EU officials said Greek Prime Minister Alexis Tsipras finally accepted a compromise on German-led demands for the sequestration of Greek state assets to be sold off to pay down debt.
Spot gold was down 0.7 percent at $1,155.54 an ounce by 0954 GMT, after posting three straight weekly declines.
U.S. gold for August delivery fell 0.3 percent to 1,154.00 an ounce.
Gold, typically viewed as an alternative investment in times of financial and economic uncertainty, had not seen significant retail buying as a result of the Greek crisis, due generally to robust dollar and prospects of higher U.S. interest rates, which would increase the opportunity cost of holding gold.
"Gold is still driven by the interest rate situation in the U.S. ...We are 50/50 between a rate hike in September and one in December and that's part of the reason we are seeing gold falling towards $1,100 in the fourth quarter," Deutsche Bank analyst Michael Lewis said.
The dollar rose 0.4 percent versus a basket of main currencies, mostly due to a weaker euro, while European shares rose, further diminishing investor appetite for assets perceived as safer, such as gold.
Also a drag on gold were signals from Federal Reserve Chair Janet Yellen on Friday suggesting the U.S. central bank is on course to raise interest rates within this year.
"We are bearish toward gold prices and the underlining factor for this is our expectation that the Fed will raise interest rates by the third quarter," said OCBC Bank analyst Barnabas Gan, who sees gold at $1,050 by the year-end.
Yellen said that while the U.S. economy should grow steadily for the remainder of the year, allowing the Fed to move with its first rate hike in nearly a decade, she stressed that U.S. labour markets remained weak and more workers could be encouraged back into jobs with stronger growth.
Hedge funds and money managers bailed out of COMEX gold and silver futures and options at the fastest pace in at least a year in the week to July 7, at the height of the commodities market's biggest rout in years, data showed.
Physical demand for gold was tepid last week as prospective investors in China chased bargains in equities after a market selloff, while those in India delayed purchases.
Silver dropped 1.3 percent to $15.39 an ounce, palladium gained 0.4 percent to $651.25 an ounce and platinum fell 0.3 percent to $1,025.25 an ounce.