Gold Ends Lower As Creditors Reject Greek Proposals

(RTTNews) - Gold futures dropped for a fourth straight session on Wednesday, but rallied to pull back a little towards the close as Greece struggled to come to an agreement with its creditors on the much needed financial aid. The latest proposals submitted by Greece were rejected by its creditors and were instead given a counter-proposal.

The precious metal also got a modest lift from its safe haven appeal amid signs of sluggishness in the global economy.

The troika of creditors rejected the reform proposals submitted by Greece earlier this week and has reportedly presented Greece with a set of counter proposals. The creditors include the International Monetary Fund, the European Commission, and the European Central Bank.

A Bloomberg report, citing a Greek government official, said creditors insisted Athens drop measures including planned extra charge on company profits, taxing electronic gaming and an hike in employer contributions to pensions.

Greek Prime Minister Alexis Tsipras in a tweet said international creditors are rejecting equivalent measures that were accepted for Portugal and Ireland.

Greece is faced with a 1.5 billion euro payment to the IMF at the end of month. The country has indicated that it will not be able to make the payment without further aid.

In economic news, a Commerce Department report on Wednesday showed contraction in U.S. economic activity in the first quarter, although the drop was much smaller than previously estimated. U.S. gross domestic product for the first quarter dipped 0.2 percent compared to the previously reported 0.7 percent drop. The modest decrease on the heels of a 2.2 percent growth in the fourth quarter, were in line with economists' estimates.

Gold for August delivery, the most actively traded contract, dropped $3.70 or 0.3 percent to settle at $1,172.90 an ounce, on the Comex division of the New York Mercantile Exchange on Wednesday.

Gold for August delivery scaled an intraday high of $1,179.70 and a low of $1,168.10 an ounce.

On Tuesday, gold prices dropped $7.50 or 0.6 percent to settle at $1,176.60 an ounce, on expectations of a Greek deal with its international creditors and likely avoid a default. Investors also weighed some soft economic data out of China and the U.S.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 705.47 tons on Wednesday from its previous close of 701.90 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 95.23 on Wednesday, down from its previous close of 95.40 on Tuesday in late North American trade. The dollar scaled a high of 95.54 intraday and a low of 94.93.

The euro trended higher against the dollar at $1.1210 on Wednesday, as compared to its previous close of $1.1168 in North American trade late Tuesday. The euro scaled a high of $1.1236 intraday and a low of $1.1158.

On the economic front, German business confidence weakened to a four-month low in June as Greece crisis weighed on the current situation assessment and expectations of companies, results of a survey by the Munich-based Ifo Institute showed Wednesday. The business confidence index fell to a four-month low of 107.4 in June from 108.5 in May. It was expected to ease to 108.1.

The French economy expanded as initially estimated in the first quarter, final data from the statistical office Insee showed Wednesday. Gross domestic product grew 0.6 percent sequentially in the first quarter after expanding 0.1 percent in the fourth quarter. The statistical office confirmed the preliminary estimate for the first quarter. This was the fastest growth since the second quarter of 2013.

U.K. mortgage approvals increased to a 14-month high in May, the British Bankers' Association said Wednesday. The number of mortgage approvals rose to 42,530 in May from 42,020 in April. This was the highest level since March 2014, when it totaled 45,318. It was forecast to rise to 43,350.

A leading index for the Chinese economy spiked in May, a survey from the Conference Board showed Wednesday. The index rose 1.1 percent, which follows the upwardly revised 1.4 percent jump in April (originally 1.1 percent) and the 0.2 percent increase in March.