Gold price slips on stronger US data

June 13, 2015

New York (Jun 13)  Gold edged lower Friday, as a recent spate of solid US economic data outweighed holdups in the latest round of Greek financial talks.

Gold for August delivery, the most actively traded contract, closed down 0.1 per cent at $US1,179.20 ($A1,522.85) a troy ounce on the Comex division of the New York Mercantile Exchange. Gold futures rose 0.9 per cent for the week, buoyed by a softer US dollar that encouraged foreign buyers and investors seeking a haven from European stock losses. It was the first weekly gain since mid-May.

A string of data showed a steady US economic recovery and bolstered expectations for the Federal Reserve to raise interest rates in coming months. Higher rates tend to weigh on gold, which struggles to compete with yield-bearing assets when borrowing costs rise.

US producer prices in May saw their largest gain in nearly two years, data showed Friday. A day before, government data showed retail sales surged in May, while a report released a week ago showed robust gains in the employment market for that month.

Placing the brakes on gold's decline were investors seeking a way to protect their wealth amid uncertainty in Europe. On Friday, German Chancellor Angela Merkel called on all parties to return to the negotiating table for Greek bailout talks, a day after the International Monetary Fund said it was halting negotiations due to a lack of progress. The uncertainty surrounding Greece's financial situation made gold attractive to investors who believe it will hold its value during turbulent times.

"So far gold has only been mildly supported by the ongoing Greek saga. But were the situation to turn more uncertain and the possibility of default appear more likely, gold could be a beneficiary," HSBC analysts said in a note to investors.


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