Gold posts slight gains, amid Greek debt concerns and sell-off in China

New York (Apr 17)  Gold rose slightly on Friday, as increasing concerns related to the Greek debt crisis and a sell-off in China outweighed stronger than expected U.S. consumer data.

On the Comex division of the New York Mercantile Exchange, Gold futures for June delivery gained 5.50 or 0.46% to 1,203.50 a troy ounce. Gold reached a high of 1,207.80 in European afternoon trading, up from a low of $1,197.00. Gold futures are up roughly 5%, since reaching a low of 1,149.00 on March 17.

Gold futures moved higher after the U.S. Bureau of Labor Statistics said its Consumer Price Index rose 0.2% for the month of March, slightly below forecasts of a 0.3% increase. A closer reading indicated that prices swung upward in medical care, used car and truck sales and household furnishing, while airlines fares declined for the fourth time and five months.

Soon after, the University of Michigan said its Consumer Sentiment index for the middle of April ticked up to 95.9, up from 93.0 at the end of March. The index reached an eight-year high in January at 98.1 before declining a month later.

Despite the strong indicators, there were still signs of sluggish growth throughout the economy within the report. Low levels for energy prices led to a downward revision in inflation expectations to 2.5% for the remainder of the year, down from an earlier projection of 3.0. The modest inflation expectations may increase the risk that consumers will curb spending while awaiting lower prices.

In addition, the subdued inflation expectations may also fuel speculation that the Federal Reserve could wait until the fall before it decides to raise interest rates.

On Thursday, Federal Reserve Bank of Atlanta president Dennis Lockhart provided little indication that the Fed could institute a highly-anticipated interest-rate hike in June. The Fed is taking a data-driven approach to the timing of its first rate hike in more than five years, as it awaits increases in wage and GDP growth, as well as steady rises in inflation before it raises its benchmark Fed Funds rate.

"The data available for the first quarter of this year have been notably weak…giving rise to heightened uncertainty about the track the economy is on," Lockhart said during a speech in St. Petersburg, Fla.

Gold, which is not attached to dividends or interest rates, struggles to compete with high yield-bearing assets in higher interest rate environments.

Elsewhere, Italian prime minister Matteo Renzi attempted to assuage fears of a Greek default on its sovereign debt. Speaking at a joint press conference with U.S. president Barack Obama at the White House, Renzi indicated that the euro zone is better prepared to react to a possible departure by Greece from the EU than it was during other economic crises over the last decade.

"The situation in Greece is not the same situation as 2011, its not the same as 2008," Renzi said. "We must absolutely achieve an agreement."

Renzi's comments came two days after German finance minister Wolfgang Schaeuble warned that practically no one expects Greece to make a series of key repayments at a critical meeting of euro zone finance ministers next week in Latvia or anytime in the near future. Athens officials have also denied a report from the Financial Times that it approached the International Monetary Fund to request a delay on a loan payment due later next month.

In China, futures fell more than 5% after regulators from the Securities Association of China increased the volume of shares available for short sellers. On Monday, China announced that exports last month fell by 15% on a year-over-year basis, while import declined by 12.7%. China is the largest producer of gold in the world and the second-largest purchaser.

Meanwhile, silver for May delivery fell 0.066 or 0.41% to 16.21 an ounce.

Copper for May delivery rose 0.006 or 0.21% to 2.78 a pound.