Gold Back Out of Favor With Fed in Focus as Greek Deal Nears

PT. Equityworld Futures - Gold futures fell for the third straight session, falling out of favor with investors as attention shifts away from Greece and back to the outlook for higher U.S. interest rates.
Federal Reserve Governor Jerome Powell suggested Tuesday that rates may rise as soon as September as the economy gains traction. Gold last week posted the biggest advance in a month after Fed officials indicated that monetary tightening will happen at a slow pace, while Greece faced an impasse with its creditors.
The metal’s rally is proving to be short lived. Mounting speculation that Greece will soon reach a deal to avoid default is cutting demand for haven assets. At the same time, signs of improving U.S. economic growth are reigniting concern that the Fed will raise rates soon, boosting the dollar. Higher rates curb gold’s allure because the commodity doesn’t pay interest or give returns like other assets such as bonds and equities.
Gold futures for August delivery declined 0.6 percent to settle at $1,176.60 an ounce at 1:37 p.m. on the Comex in New York. The three-session slump was longest since June 5.
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Gold Falls as Equities Advance After Greece Gives New Proposals

PT. Equityworld Futures - Gold dropped below $1,200 an ounce as equities climbed after Greece presented a new plan to stave off default before an emergency summit on the country’s debt crisis. Palladium slipped to a 16-month low.
European and Asian stocks advanced as Greek Prime Minister Alexis Tsipras’s proposals were welcomed by European officials, who indicated it could help break a months-long impasse during talks in Brussels on Monday.
Gold for August delivery fell 0.7 percent to $1,193.30 an ounce by 7:54 a.m. on the Comex in New York, after rising the previous two weeks. Prices reached $1,205.70 on Thursday, the highest since May 26, after the Federal Reserve said it will take a gradual approach to raising interest rates. Bullion for immediate delivery slid 0.5 percent to $1,193.86, according to Bloomberg generic pricing.
Futures are little changed this year after swinging between year-to-date gains and losses more than 10 times as investors assessed when the U.S. would increase rates and amid prolonged talks on a Greek bailout.
The MSCI Asia Pacific Index of equities advanced to the highest level in two weeks, and the Stoxx Europe 600 Index rallied 1.7 percent. Strengthening equities can reduce gold’s safe-haven appeal.
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Gold Drops Most in Four Weeks as Greek Talks Curb Haven Demand

PT. Equityworld Futures - Gold fell the most in four weeks amid speculation that months of impasse will end as Greece and its creditors reach an aid deal, reducing demand for the metal as a haven.
Global equities climbed after Greece presented a new plan to stave off default, with the Stoxx Europe 600 Index gaining the most in six weeks. The rally for shares spurred less investor interest in precious metals, and gold trading was about 18 percent below the 100-day average for this time, data compiled by Bloomberg show.
Gold futures for August delivery fell 1.5 percent to settle at $1,184.10 an ounce at 1:47 p.m. on the Comex in New York, the biggest decline since May 19.
Prices are dropping after last week capping the biggest rally in a month on signs from the Federal Reserve that increases for U.S. interest rates will be slow. Still, policy makers indicated that they’re on track to tighten monetary policy this year.
Gold may fall to $1,050, the lowest since February 2010, as rates rise, Mitsubishi Corp. forecast last week. Higher rates curb bullion’s allure because the commodity doesn’t pay interest or give returns like other assets such as bonds and equities.
Silver futures for July delivery added 0.2 percent to $16.142 an ounce on the Comex.
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Fed Says Job Gains Pick Up, Staying on Track for 2015 Rate Rise

PT. Equityworld Futures - central bank on track to raise interest rates this year for the first time in almost a decade.
“Economic activity has been expanding moderately,” the Federal Open Market Committee said in a statement Wednesday in Washington. “The pace of job gains picked up,” it said, and “underutilization of labor resources diminished somewhat” since their last meeting in April.
Separately, Fed officials maintained their forecast for the benchmark interest rate at the end of 2015, while lowering it for next year.
Policy makers predicted the rate will rise to 0.625 percent this year, according to their median estimate. That implies two quarter-point increases. Next year, they expect the rate to climb to 1.625 percent, lower than a March forecast of 1.875 percent.
A rebound in job growth is giving Fed officials reason to look beyond a first-quarter economic slowdown as they consider when to tighten policy. At the same time, inflation remains below their target, and central bankers say the timing of a rate increase depends on how economic data unfold.
“The committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of earlier declines in energy and import prices dissipate,” according to the statement.
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