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Gold eases in Asia as Greece passes needed bills for bailout funds

CommoditiesJul 15, 2015 08:26PM ET
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Gold down slightly in Asia - Gold prices dipped slightly in Asia on Thursday after Greece passed legislation needed to get bailout funds that could re-open its banking system and make needed payments on sovereign debt.

Greece's parliament late Wednesday in Europe passed a key austerity bill needed to kick start a third bailout program with Prime Minister Alexis Tsipras vowing not to resign and pledging to go after oligarchs, tax evasion and corruption, reports said.

The vote was 229 yes, 64 no and 6 present, reflecting support on the measures from opposition parties.

In the final moments of debate, Tsipras said that he would remain in office and that his government would not relinquish power as of the result of the deal he made earlier this week with Greece's international creditors.

Tsipras defended the negotiations, telling parliament that his choices were stark: accept a deal or be forced into what he called a "disorderly default." He also mentioned a third option, a voluntary exit from the euro zone.

On the Comex division of the New York Mercantile Exchange, gold for August delivery eased 0.08% to $1,146.50 a troy ounce.

Silver for September delivery dipped 0.27% to $15.008 a troy ounce. Copper for September delivery rose 0.07% to $2.516 a pound.

Overnight, gold futures plummeted to its lowest level of 2015 amid a stronger dollar, as Federal Reserve chair Janet Yellen sent strong indications that economic conditions will justify an interest rate hike by the Fed at some point this year.

In prepared remarks before Congress during her semi-annual Humphrey-Hawkins testimony, Yellen reiterated that the Federal Open Market Committee will likely raise its benchmark Federal Funds Rate later this year if it continues to see improvements in the U.S economy and labor markets. The benchmark rate has remained at its current level of between zero and 0.25% since the end of the financial crisis. Meanwhile, more than eight years have passed since the Fed last instituted a rate hike.

"What matters for financial conditions and the broader economy is the entire expected path of interest rates, not any particular move, including the initial increase, in the federal funds rate," Yellen said. "Indeed, the stance of monetary policy will likely remain highly accommodative for quite some time after the first increase in the federal funds rate in order to support continued progress toward our objectives of maximum employment and 2 percent inflation."

Gold, which is not attached to interest rates or dividends, struggles to compete with high-yield bearing assets in periods of rising interest rates.

Following Yellen's comments the FOMC is widely expected to raise the Federal Funds Rate later this year during its September or December meeting. An earlier rate increase could correlate with a more gradual long-term rate path, while a delayed rate hike might force the Fed to accelerate the rate path, Yellen added.

"The entire path of rate increases does matter," Yellen said.

Gold eases in Asia as Greece passes needed bills for bailout funds

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