Gold above 3-1/2 month low on dollar, focus on Greek

LONDON: Gold prices firmed yesterday, rebounding from a 3-1/2 month low as the dollar softened after weaker-than-forecast US employment data tempered expectations for a September rate rise by the Federal Reserve. Investors remained cautious ahead of Greece’s referendum at the weekend on an international bailout deal, while liquidity should remain thin throughout the day as U. markets are closed for Independence Day. Spot gold was up 0.2 percent to $1,168.39 an ounce by 1213 GMT. The metal fell to $1,156.85 on Thursday, its lowest since mid-March, ahead of the release of US non-farm payrolls, as the market had positioned itself for a positive number. It then pared losses as the dollar fell against a basket of currencies after the data showing jobs growth was weaker than expected last month.

“Judging from how gold fell ahead of yesterday’s US data, the bias in the gold market is clearly to the bearish side,” Julius Baer analyst Carsten Menke said. Before the data, there had been strong expectations the Fed would raise rates for the first time in nearly a decade in September, given recent strong numbers on consumer spending and housing. Gold has been under pressure this year from uncertainty over the timing of any rate increase as raising them could boost the dollar further and dent demand for non-interest-paying bullion.

For the week, gold was still heading for a 0.5 percent fall, adding to a 2 percent weekly loss previously, mostly as a result of gains in the dollar against the euro as the Greek debt crisis unfolded. Uncertainty around Greece as yet has failed to trigger strong retail demand for gold, often perceived as a safe haven. “The gold market is pretty relaxed about Greece but I think a ‘No’ in the polls could cause some upside volatility,” Menke said.— Reuters