MW: Gold prices decline as U.S. dollar strengthens against euro
NEW YORK (MarketWatch) -- Gold futures fell on Friday as the U.S. dollar strengthened against the euro, with the European currency hit over worries about Greece's capacity to cover its debt.
Gold futures for June delivery on the Comex division of the New York Mercantile Exchange declined $3.20 to $1,157.1 an ounce.
"Downside movement from here may be absorbed by safe haven activity, which has underpinned in recent sessions. Movement under $1,150 is expected to encourage bargain hunting, while on the topside sell interest is anticipated into $1162," wrote analysts at Action Economics.
On Thursday, gold rose 70 cents, or 0.6%, to $1,160.30 an ounce as investors sought safety amid ongoing concern over Greece.
Holdings in the world's biggest gold-backed exchange-traded fund, the SPDR Gold Trust (GLD 112.44, -1.21, -1.07%) , on Thursday held at record levels after weeks of solid demand.
But gold encountered head winds on Friday as the dollar advanced against the euro, with sovereign debt issues in the euro zone weighing on the single currency.
A stronger dollar weighs on gold and other dollar-denominated commodities as it makes those alternative assets for costly for foreigners using other currencies.
That scenario also played on Friday in the energy market, with oil futures declining 81 cents to $85.94 a barrel, with concern over U.S. demand adding to the pressure brought by the strengthening dollar. Read about impact of economic reports on price of oil.
The dollar index (DXY 80.67, +0.19, +0.24%) climbed to 80.59 from 80.475 late Thursday. Read about worries of a hung parliament putting pressure on the British pound.
