Gold Ends Higher As Dollar Continues To Weaken

(RTTNews) - Gold futures moved up for a third straight session to settle at a one-week high on Wednesday, with investors opting for the safe haven appeal of the precious metal as the dollar trended lower against some major currencies and continued focus on the developments in Europe over Greece's financial debt woes.

Investors also await some crucial economic data from the U.S. later in the week which would provide more cues as to the timing of the much discussed interest rate hike by the Federal Reserve.

Concerns over the global economy and weaker stocks also helped gold get attention as an alternative investment.

However, gains have been capped by the uncertainty over the timing of a likely rate hike by the Federal Reserve, even as global equity stocks recovered from the sell-off seen over the last couple of days.

Meanwhile, the European Central Bank has raised the funding limits that Greek banks can borrow under an emergency lending program, reports citing unnamed Greek officials said Wednesday. The move could be a boon for the extremely stressed Greek banks even as government talks with international creditors seem to be going nowhere.

Gold for August delivery, the most actively traded contract, gained $9.00 or 0.8 percent to settle at $1,186.60 an ounce, on the Comex division of the New York Mercantile Exchange on Wednesday.

Gold for August delivery scaled an intraday high of $1,191.80 and a low of $1,174.30 an ounce.

On Tuesday, gold prices gained $4.00 or 0.3 percent, to settle at $1,177.60 an ounce, as the dollar trended lower and investors focused on the Greek financial debt woes with no resolution in the horizon.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 705.72 tons on Wednesday from its previous close of 708.70 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 94.69 on Wednesday, down from its previous close of 95.19 on Tuesday in late North American trade. The dollar scaled a high of 95.23 intraday and a low of 94.32.

The euro trended higher against the dollar at $1.1317 on Wednesday, as compared to its previous close of $1.1282 in North American trade late Tuesday. The euro scaled a high of $1.1385 intraday and a low of $1.1264.

On the economic front, China's central bank on Wednesday sharply cut its inflation projection for the year and lowered the growth forecast as it expects government measures to underpin the momentum. The People's Bank of China lowered its inflation forecast to 1.4 percent from 2.2 percent predicted earlier.

The growth forecast was reduced to 7 percent from 7.1 percent. China's economic growth had eased to 7 percent in the first quarter, the weakest pace in six years, from 7.3 percent in the previous three months.

U.K. industrial production expanded in April on oil and gas extraction, while manufacturing output shrank due to the weakness in pharmaceutical products. Data from the Office for National Statistics showed that industrial output grew 0.4 percent month-on-month in April, better than the expected growth of 0.1 percent but weaker than March's 0.6 percent increase.

French industrial and manufacturing output declined unexpectedly in April, the statistical office Insee revealed Wednesday. Industrial output dropped 0.9 percent from March when it remained flat. This was the first decline in five months. Economists had forecast production to grow 0.4 percent.

France's current account turned to a surplus in April, as a decline in imports of crude oil imports led to a narrowing in the visible trade deficit, the Bank of France said Wednesday. The current account showed a surplus of EUR 0.4 billion for April versus a deficit of EUR 1.4 billion for March. The merchandise trade deficit narrowed to EUR 1.1 billion from EUR 3.2 billion.

Producer prices in Japan were up 0.3 percent on month in May, the Bank of Japan said on Wednesday. That beat the forecast for an increase of 0.2 percent following the 0.1 percent gain in April.