EM: Gold at 3-1/2 month low on dollar ahead of U.S. payrolls data
LONDON (July 2): Gold fell to a 3-1/2 month low on Thursday, extending losses into a third straight session on a strong dollar ahead of U.S. jobs data that could support expectations that the Federal Reserve will raise interest rates soon.
The market was also following developments in the Greek debt crisis, which as yet has failed to trigger strong retail demand for the metal, often perceived as a safe-haven asset.
Spot gold slid to $1,159.60 an ounce, its lowest since March 18, and was trading 0.7 percent down at $1,161.06 by 1155 GMT. It has lost about 1 percent in the previous two sessions.
The dollar hit a three-week high against a basket of major currencies, supported by strong U.S. private employment data on Wednesday and weakness in the euro after Greece defaulted on a loan repayment to the International Monetary Fund.
With U.S. markets closed on Friday for the July 4 Independence Day holiday, monthly non-farm payrolls data will be issued a day earlier than usual, along with durable goods numbers.
A stronger U.S. currency makes dollar-denominated gold more expensive for foreign investors.
"Positive news from the U.S. economy will support the view the Fed will hike rates in September," Danske Bank senior analyst Jens Pedersen said.
"And given that a September hike is still not priced in by the market, it could certainly weigh on gold."
More encouraging data could prompt the Fed to raise rates sooner rather than later, hurting demand for non-yielding bullion. Gold prices have been hamstrung by the prospect of higher U.S. interest rates this year, which would increase the opportunity cost of holding the metal.
The focus in the Greek crisis is on Sunday's referendum.
Prime Minister Alexis Tsipras has urged Greeks to reject an international bailout deal, wrecking any prospect of repairing relations with European Union partners before a referendum that could decide Greece's future in Europe.
There is scope for the Greek crisis to drive more risk-averse money into gold if it worsens to the point where Greece leaves the euro zone, or if there is contagion in other economies in the bloc, such as Italy, Portugal or Spain, traders said.
Silver rose 0.3 percent to $15.57 an ounce, after losing 1.3 percent in the previous session. Palladium fell 0.4 percent to $693.75 and platinum dropped 0.6 percent to $1,073.65.
