Gold slumps to 1-week low with Greece, U.S. rate hike in focus

Investing.com - Gold prices fell to a one-week low on Wednesday, as investors continued to monitor developments surrounding talks between Greece and its international creditors and amid concerns surrounding the impact of a rate hike in the U.S.

The euro group of finance ministers was to hold talks later in the day to discuss whether to present a final plan to European Union leaders at a summit meeting on Thursday. If an agreement is reached the Greek parliament could vote on a deal as soon as this weekend.

Gold futures for August delivery on the Comex division of the New York Mercantile Exchange hit an intraday low of $1,175.00 a troy ounce, the weakest level since June 17, before trading at $1,175.20 during European morning hours, down $1.40, or 0.12%.

Futures were likely to find support at $1,171.90, the low from June 11, and resistance at $1,200.80, the high from June 22.

A day earlier, gold lost $7.50, or 0.63%, to close at $1,176.60 amid renewed expectations for higher U.S. interest rates later this year.

Federal Reserve Governor Jerome Powell said Tuesday there was a 50-50 chance of a rate hike at the Fed's September meeting and added that he envisioned a second hike in December.

Meanwhile, U.S. data showed that new home sales jumped to a more than seven-year high in May, bolstering the outlook for the economy.

A separate report showing a rebound in business investment plans last month also boosted the outlook for growth this quarter after a weak start to the year.

The upbeat data boosted optimism over the health of the economy and supported the case for a U.S. interest rate hike later this year.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

Also on the Comex, silver futures for July delivery tacked on 3.1 cents, or 0.2%, to trade at $15.77 a troy ounce, while copper for July delivery rose 1.4 cents, or 0.52%, to trade at $2.627 a pound.