Gold fell for the fourth straight session to a two-week low early on Wednesday as the dollar pared earlier losses versus the euro and traders awaited news on Greece's negotiations with its international lenders to avoid default. The precious metal has declined as the dollar strengthened and optimism over the prospects for a deal on Greece prompted investors to favor assets seen as higher risk, such as stocks.
Gold edged higher in earlier trade as both stocks and the dollar retreated, but failed to maintain momentum as those assets recovered from lows. Prices fell to their lowest since June 8 at $1,171.03. Spot gold was down 0.3 percent at $1,174.20 an ounce at 3:05 pm EDT (1905 GMT), while US gold futures for August delivery settled down $3.70 an ounce at $1,172.90.
"Gold continues to struggle with multiple headwinds," Saxo Bank head of commodity research Ole Hansen said. "But we have nevertheless managed to find some support towards $1,170. We can probably expect the range bound nature will continue for now." "Industrial metals and platinum seems to be on the mend and that may indirectly provide some support," he added.
Global equity markets and the dollar slipped as skittish investors sought the safety of less risky assets as the possibility of a Greek debt default loomed a little bit larger. Time is running out before the June 30 deadline when Greece has to repay 1.6 billion euros ($1.8 billion) to the International Monetary Fund, or face default.
Speculation that the US Federal Reserve will raise rates for the first time in nearly a decade has weighed on gold prices this year. Higher rates lift the opportunity cost of holding non-yielding bullion, and benefit the dollar. "US economic data continues to get a little bit better as the days go by, which is bearish for gold," said Mike Dragosits, senior commodity strategist for TD Securities in Toronto.
In the official sector, the latest data from the International Monetary Fund showed that Russia and Kazakhstan raised their gold holdings again in May. Silver was up 0.8 percent at $15.89 an ounce. Spot platinum was up 0.4 percent at $1,069.50 an ounce, while spot palladium was down 0.1 percent at $693.25 an ounce.
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