Greek progress & US data hold down gold price

Frankfurt (Jun 4) Gold neared a three-week low Thursday as signs of progress emerged in the Greek debt crisis and robust economic data made an increase in US interest rates appear more likely.

Spot gold slipped 0.2 percent to $1,182.80 an ounce by 0635 GMT. The metal touched $1,179.43 Wednesday, its lowest price since May 11.

Data released Wednesday showed that the US trade deficit narrowed in April, while companies picked up their hiring in May after a pullback the previous month.

The economy looks to have recovered somewhat from a first-quarter contraction and that bolstered expectations the Federal Reserve could raise interest rates later this year.

"Our outlook for the gold price remains bearish," Societe Generale analyst Robin Bhar said. "As US economic growth is expected to strengthen over the summer, a rate hike should become imminent by September."

Higher rates would dent demand for non-interest-paying gold, while boosting the dollar.

Investors spent Thursday waiting for more clues about the economy from US weekly jobless claims later in the day and a nonfarm payrolls report Friday.

Safe-haven support for gold from the Greek debt crisis also weakened on signs that Athens could be inching closer to a deal with its creditors.

Source: Reuters