11.05.2015 20:10:41

Gold Ends Lower Despite China Stimulus; Greece In Focus

(RTTNews) - Gold futures ended lower on Monday, with investors focused on the Greek financial crisis as Athens is due to pay back some big debt to the International Monetary Fund this week. The crucial Chinese stimulus failed to trigger any fresh buying over the weekend.

Traders remain confused as to when the Federal Reserve intends to raise interest rates, with some betting on the summer and others thinking tightening is some way off.

China slashed interest rates for the third time in six months over the weekend in a bid to boost lending to businesses, adding stimulus to a slowing economy. The bank had cut rates previously in March. The bank lowered its lending rate in November for the first time in more than two years.

The one-year lending rate would be reduced by 25 basis points, or a quarter of a percentage point, to 5.1 percent, officials said. The economic superpower that was once growing at a breakneck speed has slowed down sharply in recent months.

Concerns over the situation in Greece continued to weigh on investor sentiment, with Athens due to make a 750 million euro payment to the International Monetary Fund on Tuesday. Eurozone finance ministers are scheduled to meet in Brussels later today to consider the Greek government's progress in the implementation of structural reforms in exchange for bailout funds.

Gold for June delivery, the most actively traded contract, shed $5.90 or 0.5 percent to settle at $1,183.00 an ounce, on the Comex division of the New York Mercantile Exchange on Monday.

Gold for June delivery scaled an intraday high of $1,190.90 and a low of $1,178.00 an ounce.

On Friday, gold futures dropped $6.70 or 0.6 percent to settle at $1,188.90 an ounce, on some better-than-expected jobs data from the U.S. with unemployment rate dropping to a 7-year low. The data is seen as solid but not strong enough to put a June interest rate hike by the Federal Reserve back on the table.

Holdings in SPDR Gold Trust, the top gold-backed exchange-traded fund, fell sharply on Friday, suggesting gold has lost some of its appeal.The world's largest gold-backed exchange-traded fund dropped to 728.32 tons from its previous close of 739.06 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 95.04 on Monday, up from its previous close of 94.87 on Friday in late North American trade. The dollar scaled a high of 95.26 intraday and a low of 94.80.

The euro trended lower against the dollar at $1.1154 on Monday, as compared to its previous close of $1.1205 in North American trade late Friday. The euro scaled a high of $1.1205 intraday and a low of $1.1132.

On the economic front, Germany's manufacturing turnover dropped for the second straight month in March, figures from Destatis showed Monday. Manufacturing turnover fell a seasonally and working-day-adjusted 1.0 percent month-over-month in March, faster than previous month's 0.8 percent decrease, which was revised from a 0.7 percent decline estimated earlier.

The People's Bank of China on Saturday cut both benchmark lending and deposit rates by 25 basis points to 5.1 percent and 2.25 percent, respectively. The latest reduction in interest rates is aimed at easing funding costs for businesses to promote economic development as the country continues to face relatively big downward pressure, the central bank said.

The Bank of England left its key record low interest rate and the size of the quantitative easing unchanged ahead of the publication of its latest quarterly update on inflation later this week, amid low inflation and signs of slowdown in the economy.

The Monetary Policy Committee, led by Bank of England Governor Mark Carney, decided on Monday to retain the key bank rate at 0.50 percent and the size of asset purchases at GBP 375 billion.

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