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Gold trades in tight range on U.S. dollar, Greece uncertainty

Published 06/20/2011, 03:26 AM
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Investing.com – Gold futures traded in a tight range on Monday, fluctuating between small gains and losses as a broadly stronger U.S. dollar dampened the appeal of the precious metal, while uncertainty over a bailout package for Greece supported prices.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,538.65 a troy ounce during late Asian trade, dipping 0.1%.             

The gold contract traded between a range of USD1,535.75, the daily low and USD1,542.55, the daily high.

The euro weakened against the U.S. dollar after Euro Group finance ministers postponed a decision on a second Greek rescue package until mid-July.

Luxembourg’s finance minister Jean-Claude Juncker said on Sunday that a new bailout package for Greece would be dependent on whether the Greek parliament managed to pass a new austerity package.

“I cannot imagine for one second that we would commit to finance Greece without knowing that the Greek Parliament has given a vote of confidence to the Greek government,” Mr. Juncker said. 

Greece’s parliament is expected to vote on the controversial new austerity package on Tuesday.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.58% to trade at 75.90.

A stronger dollar saps demand for raw materials as an alternative investment and makes metals priced in the currency more expensive in terms of other monies.

Despite the pullback, gold prices were expected to remain well-supported by worries over Greece’s debt woes and fears that the crisis could spread to other peripheral euro zone member states.

Ratings agency Moody’s said late Friday that it placed Italy’s sovereign debt rating under review for a downgrade.

Elsewhere, silver for July delivery slumped 0.75% to trade at USD35.60 a troy ounce during late Asian trade, while copper for July delivery declined 0.85% to trade at USD4.064 a pound.

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