Gold nudged lower on Thursday morning, with a stronger dollar ruling out a fourth day of consecutive gains – so far.
The spot gold price of $1,180.50/1,181.30 per ounce was down $4.80 on Wednesday’s close – it has been confined to an intraday range of $8.
“The brief rally on precious metals over the last few days seems to have fizzled out now,” Marex Spectron’s David Govett said. “The move was down to two factors, an overly short market and a weaker dollar.”
After hitting its lowest since May 18 on Wednesday, the dollar has recovered to 1.1251 against the euro this morning, with the dollar index up nearly 0.6 percent at 95.18.
Greek bailout concerns remain heightened despite the leaders of Greece, France and Germany agreeing to intensify negotiations over financial aid for the indebted country. Still, market participants are split on whether or not the situation is providing support for gold prices or not.
“Greece, with the greatest of respect to those good people, is an irrelevance within the precious metals markets,” Govett added. “As I have said many times this year, gold has been of little use as a hedge against global problems and the concept of Greece either staying or leaving the Euro is just not a factor.”
But Commerzbank’s Carsten Fritsch disagreed, identifying the crisis as “lending support to the gold price”.
Elsewhere, gold ETF outflows have continued; as long as this continues, the gold price is unlikely to make any significant gains, Fritsch added.
Holdings in the world’s largest gold ETF – SPDR Gold Trust – have dropped to their lowest since September 2008 at 704.22 tonnes, which was when US investment bank Lehman Brothers went bankrupt.
“In other words, all the holdings that had been built up since then have now been withdrawn again,” Fritsch said.
In data today, a rebound is expected in US retail sales 1.1 percent for May from 0 percent previously. If this figure falls short, there could be a reversal in the dollar, which may push up gold during around the New York open.
The core figure, which strips out the volatile elements, is expected at 0.7 percent compared with 0.1 percent previously.
The weekly unemployment claims are expected at 277,000 alongside US import prices for May.
In data already released, Chinese industrial production moved up to 6.1 percent. Retail sales came in as expected at 10.1 percent, while fixed asset investment was lower than the previous 11.4 percent.
In other precious metals, silver was last down 15 cents at $15.83/15.88 per ounce, platinum slipped $4 at $1,106/1,111 and palladium drifted $2 lower to $737/742.
(Editing by Mark Shaw)
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