Investing.com -- Gold futures spiked on Monday afternoon paring earlier losses, as the latest collapse of talks in the Greek Debt Crisis sent indications that the cash-strapped nation could default on its sovereign debt.
On the Comex division of the New York Mercantile Exchange, gold for August delivery gained 8.00 or 0.68% to 1,187.20 a troy ounce. In the span of a half-hour near the closing of European markets, gold futures gained more than $7 an ounce amid heavy volume. On Monday, gold traded between a range of 1,172.10 and 1,189.80 on a choppy day of trading.
In Brussels, weekend negotiations between Greece and its international creditors ended acrimoniously as the two sides failed to bridge wide gaps on issues ranging from pension reforms, taxes and a primary surplus level. Greece is running out of time before the final portions of its €240 billion bailout expire on June 30.
It is unknown if Greece has enough cash in emergency reserve funds to meet a €1.1 billion loan repayment to the International Monetary Fund at the end of the month. The IMF has remained adamant that Greece enact significant pension cuts and impose higher Value-Added Taxes on electricity before it agrees to a deal.
"We should work out an emergency plan because Greece would fall into a state of emergency," Germany's European Union commissioner Guenther Oettinger told reporters. "Energy supplies, pay for police officials, medical supplies, pharmaceutical products and much more (need to be covered)."
On Monday, yields on Greek 2-Year bonds surged almost 300 basis points to 26.6% as the possibility of a Greek deal waned. Investors await Thursday's meeting of euro zone finance ministers in Luxembourg for further developments in the saga.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell 0.12% to 95.12, paring earlier gains amid mixed economic data.
The Federal Reserve's monthly index for US Industrial Production fell by 0.2% last month, below low end of analysts' forecasts of a 0.1% gain. Manufacturing continued to weigh on the index, declining by 0.2% in May, marking its third negative reading in the last five months. Lags in consumer goods and construction spending contributed to the poor reading.
In addition, the Empire State Manufacturing Index Survey's General Business Conditions Index plunged 1.98 for May, well below the low-end of forecasts for a 4.00 gain.
At the same time, however, the National Association of Home Builders reported a five-point spike in its Housing Market Index to 59 in May, significantly beyond analysts' high-end forecasts. The index received a boost from future sales, which soared by six points on the month to a reading of 69.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for July delivery surged 0.273 or 1.72% to 16.098 a troy ounce.
Copper for July delivery fell 0.031 or 1.15% to 2.647 a pound.