Gold came under pressure on Friday morning from the dollar’s continued rise after comments from German Chancellor Angela Merkel about the euro’s strength.
The spot gold price was last at $1,179.00/1,179.80 per ounce, down $2 on the previous session, having traded within a tight $6 intraday range so far.
The dollar built on earlier gains after German Chancellor Angela Merkel appeared to target the euro-dollar exchange rate in a similar fashion to Barack Obama.
She reportedly argued that the strong euro exchange rate makes it harder for countries such as Spain and Ireland to make reforms. The euro struck an intraday low of 1.1151 against the euro on the news, nudging gold into negative territory.
The greenback was already rising on positive US data on Thursday – retail sales for May at 1.2 percent beat the forecast 1.1 percent and were well above the previous 0 percent. The core figure, which strips out volatile elements, at 1.0 percent also bettered the expected 0.7 percent.
The figures suggest that household spending is finally starting to reflect job growth and lower gasoline prices and, more importantly, that growth in the second quarter will bounce back from the contraction in the first.
“Good US economic data, which for a time gave rise to a strong appreciation of the US dollar, clearly precluded any increase in the gold price,” Commerzbank said.
But there has been little progress in Greek bailout negotiations, it noted – uncertainty over what will happen should result in a higher gold price, it noted.
Last night IMF spokesman Gerry Rice announced that its delegation had abandoned negotiations in Brussels, claiming that there are “major differences” between creditors and Greece “in most key areas”.
Still, the crisis has little sway on the gold price, Marex Spectron’s David Govett believes.
“Greece, with the greatest of respect to those good people, is an irrelevance within the precious metals markets,” he said. “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.”
In a quieter day for data, the German WPI came in better than expected earlier at 0.5 percent while eurozone industrial production fell just short at 0.1 percent. The US PPI and the University of Michigan’s consumer sentiment report are due later.
In the other metals, silver was last at $15.89/15.94 per ounce, down nine cents, while platinum slipped $7 to $1,097/1,102 and palladium was unchanged at $738/744.
(Editing by Mark Shaw)
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