Gold ticks up for second straight day as Greece, U.S rate hike weigh
San Francisco (Jun 9) Gold futures ticked upward for the second consecutive session, as an impasse in Greek debt negotiations and the timing of a much-anticipated interest rate hike by the Federal Reserve remained in focus.
On the Comex division of the New York Mercantile Exchange, gold for August delivery gained 2.90 or 0.24% to 1,176.40 a troy ounce. Gold traded in a tight range of $1,171.90 and $1,182.30 on Tuesday, amid a relatively stable dollar. The precious metal is up modestly by less than 1% over the last several sessions, after reaching a session-high of $1,204.70 on June 1.
Gold likely gained support at 1,162.10, the low from June 5 when it touched down to an 11-week low. It was met with resistance at 1,192.80, the high from May 28.
In Athens, Greece prime minister Alexis Tsipras was scheduled to brief leaders of the leftist Syriza government on Tuesday evening ahead of a meeting on Wednesday with Germany chancellor Angela Merkel and France president Francois Hollande in Brussels. Tsipras is reportedly approaching the meeting with a more conciliatory position than latest attempts over the last few weeks in an effort to reach a breakthrough in the slow-moving talks. Following the latest stalemate in tense negotiations, Tsipras has offered to make a series of concessions through raising Value-Added Tax rates and accepting higher budget surplus targets.
Earlier, euro zone officials promptly dismissed Greece's latest proposal on tax, debt and budget reforms. Despite initial reports claiming that the two sides were hours from striking a deal late last week, Greece and its international creditors still remain "far apart" on reaching an accord after submitting divergent proposals on a cash-for-reforms plan. Greek officials reportedly scrambled on Tuesday to revise their latest proposal that was rejected by leaders of the European Central Bank and European Commission.
Greece's European creditors have pressured the cash-strapped nation to back away from pre-election promises earlier this year to undo massive cuts in pension benefits and other government programs. A previous bailout prior to Tsipras victory in January forced Greece to slash retirement benefits that comprise approximately 16% of the nation's GDP.
The creditors are hoping to establish substantial penalties for Greek citizens who opt for early-retirement, as well as raise taxes on utilities and basic consumer goods such as medicine. Tsipras has described the proposal as "irrational."
By the end of the month, Greece owes the International Monetary Fund a sum of EUR 1.1 billion after it bundled four separate obligations to the organization late last week into one payment. On Monday, Merkel told reporters at the G7 summit in Germany that Greece is running out of time to reach a deal.
Gold is considered a safe-haven for investors in periods rife with economic uncertainty.
Meanwhile, metal traders continued to digest optimistic U.S. jobs data last week that could increase the possibility that the Federal Reserve will raise interest rates by September. The U.S. Department of Labor said non-farm payrolls increased by 280,000 in May, above expectations for a 220,000 gain. More importantly, average hourly wages surged by 0.3% from the prior month, above forecasts for a 0.1% uptick.
On Monday, Minneapolis Fed president Narayana Kocherlakota announced that he will be stepping down to accept a position as an economics professor at the University of Rochester. The departure of Korcherlakota, a noted Dove on the Fed, could indicate that an interest rate hike might be imminent.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, inched up 0.01% to 95.23.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for July delivery fell 0.07 or 0.11% to 15.942 a troy ounce.
Copper for July delivery gained 0.016 or 0.62% to 2.714 a pound.