Bullion price flat as dollar offsets weak equities, set for weekly increase

NEW YORK/LONDON — Gold inched lower on Friday, shrugging off the slightly weaker dollar, lower equity markets and uncertainty over the Greek debt crisis, as traders were cautious ahead of the US Federal Reserve’s policy-setting meeting this week.

Bullion was heading for its first weekly rise in four weeks, capitalizing on gains made earlier in the week, when the weak dollar and increased worries over Greece’s talks with its international lenders provided support.

Spot gold eased 0.2% to $1,179.75 an ounce (/oz) by 2:54 p.m. EDT (1854 GMT), while US gold futures for August delivery lost $1.20 to settle at $1,179.20/oz.

Earlier dollar strength weighed on gold, making it more expensive for holders of other currencies, but the precious metal failed to garner any strength when the greenback turned slightly lower.

“It’s a summer Friday- type atmosphere,” Bill O’Neill, cofounder of commodities investment firm LOGIC Advisors in New Jersey, said on Friday last week, referring to the lackluster session. “It’s a cautious day ahead of the Fed meeting. The nuances of next week’s FOMC ( Federal Open Market Committee) statement might be more hawkish than what we’ve seen in the past.”

The US central bank will begin its two-day meeting on Tuesday, with a statement to be released on Wednesday afternoon.

Data on Friday showed US producer prices in May recorded their biggest increase in more than two-and-a-half years, while US consumer sentiment rose more than expected in June.

A firming economy could prompt the Fed to raise interest rates in September, which would boost the dollar further, in turn denting demand for noninterestpaying bullion.

“We expect a single rate hike in 2015, the million-dollar question is whether a rate hike will be able to push it below $1,150,” ING Bank senior strategist Hamza Khan said.

The precious metal, typically seen as a hedge against political and financial risk, gave back early gains when it saw some support from the deteriorating Greek debt talks.

“The perception is that Europe can handle a Greek default better than it would have in 2010, when gold fell on the back of the unfolding of the Greek crisis and the fear of contagion to other periphery countries,” Natixis analyst Bernard Dahdah said.

Weak physical demand and outflows from exchange-traded funds continue to undermine gold prices, traders said.

Silver was down 1.1% at $15.86/ oz, while platinum fell 1.4% to $1,090/oz and palladium lost 1.2% to $734.50/oz. —