Gold Settles Higher On Weak Dollar, Global Cues

(RTTNews) - Gold futures snapped a three-day loss to end higher on Monday, tracking declining global equity markets with the dollar trending lower against a basket of major currencies.

A weaker dollar tends to encourage buying in dollar-priced commodities, making it cheaper to holders of other currencies.

The precious metal was under pressure after the International Monetary Fund stressed the Federal Reserve should refrain from hiking interest rates after the Fund slashed its U.S. growth forecast for the year.

Some positive news on the U.S. economy may push the Federal Reserve to raise interest rates this summer, although a move before September now seems unlikely.

The International Monetary Fund's deputy managing director today warned that there is "considerable" risk if the Fed hikes rates too soon.

"The risk is once market sentiment shifts - possibly triggered by normalization - yields could sharply increase and capital flows could reverse," Mitsuhiro Furusawa told an international conference in Seoul.

Markets will be paying attention to the Commerce Department's retail sales report for May, the jobless claims report and the results of a consumer sentiment survey by the University of Michigan.

Meanwhile, the Greek tragic drama on its financial woes continues to simmer in the background. With no progress thus far, Greece's talks with its international creditors to resolve its debt woes is set to continue later today. News reports say the Greek Prime Minister Alexis Tsipras is also scheduled to meet German Chancellor Angela Merkel and French President François Hollande in Brussels on Wednesday.

Gold for August delivery, the most actively traded contract, gained $5.50 or 0.5 percent to settle at $1,173.60 an ounce, on the Comex division of the New York Mercantile Exchange on Monday.

Gold for August delivery scaled an intraday high of $1,177.10 and a low of $1,168.50 an ounce.

On Friday, gold prices dropped $7.10 or 0.6 percent to settle at $1,168.10 an ounce, after some strong U.S. jobs data with a stronger than expected growth in May.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, edged down to 708.70 tons from its previous close of 709.89 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 95.44 on Friday, down from its previous close of 96.40 on Friday in late North American trade. The dollar scaled a high of 96.55 intraday and a low of 95.33.

The euro trended higher against the dollar at $1.1256 on Monday, as compared to its previous close of $1.1115 in North American trade late Friday. The euro scaled a high of $1.1274 intraday and a low of $1.1085.

In economic news, Chinese exports fell in May albeit less than expected, while imports declined sharply lifting the trade surplus notably to an above expected level. Exports dropped 2.5 percent in May from a year ago, data from the General Administration of Customs showed Monday. Shipments were forecast to decline by 4.4 percent after contracting 6.4 percent in April.

At the same time, imports plunged 17.6 percent, bigger than a 10 percent fall forecast by economists. Imports had decreased 16.2 percent in April. Consequently, the trade surplus rose to $59.49 billion from $34.1 billion in April. It was expected to rise to $44.8 billion.

Eurozone investor confidence declined to a four-month low in June, survey data from the think tank Sentix showed Monday. The investor confidence index fell to 17.1 in June from 19.6 in May. This was the lowest reading since February, when the score was 12.4. The reading was above the expected score of 18.9.

Germany's exports increased unexpectedly in April, while industrial production rebounded at a faster-than-expected pace suggesting that the economy has not lost its steam. Exports rose a seasonally and calendar-adjusted 1.9 percent month-on-month in April, faster than previous month's 1.3 percent increase, provisional data from Destatis showed Monday.

This was the third consecutive rise in exports and came in contrast to a 0.4 percent drop forecast by economists. Meanwhile, imports fell 1.3 percent in April from the prior month, in contrast to economists' expectations for a 0.5 percent rise. It was the first decrease in three months. In March, imports grew 2.4 percent.

German industrial production expanded 0.9 percent month-on-month in April, reversing a revised 0.4 percent fall in March, another report showed today. It was larger than the expected 0.5 percent increase and also the biggest growth for the year.

Elsewhere in Europe, the United Kingdom's growth outlook was downgraded, due largely to some weaker-than-expected first quarter gross domestic product growth, the Confederation of British Industry said Monday.

The business group lowered the U.K.'s growth outlook for this year to 2.4 percent from 2.7 percent predicted in February. For 2016, the growth forecast was lowered to 2.5 percent from the previous estimate of 2.6 percent. Growth in 2014 was 2.8 percent.