Gold Ends Lower On Likely Rate Hike This Year

(RTTNews) - Gold futures ended lower for a second straight session on Thursday, after U.S. Federal Reserve Chief Janet Yellen stressed there will be an interest hike this year, with investors preferring the riskier equity assets with global markets on the rise.

The down-tick in gold prices come despite the dollar trending lower against some major currencies.

For the week, gold futures shed about 0.5 percent.

Speaking at the City Club of Cleveland on Friday, Yellen said the economy showed signs of improving and expects to introduce a rate hike this year. She stressed the momentum of the U.S. economy is good with job gains leading to stronger consumer spending and consequently more employment and wage gains.

Investors also kept a close watch on developments in Europe, where efforts are on for a last-ditch effort to keep Greece in their monetary union. Greece has threatened to go it alone unless they receive less punitive terms for bailout funds that will help the nation avoid a default on its sovereign debt.

Both Greece and its creditors have been digging in their heels, although reports indicate a deal may be on the cards today.

Greek Prime Minister Alexis Tsipras is seeking the backing of his parliament for a EUR 13 billion austerity plan under the European Stability Mechanism. Greece had submitted the proposal to its international creditors Thursday night.

"We are confronted with crucial decisions," Tsipras said. "We got a mandate to bring a better deal than the ultimatum that the Eurogroup gave us, but certainly not given a mandate to take Greece out of the euro zone. We are all in this together."

While addressing parliament on Friday evening, Greece finance minister Euclid Tsakalatos outlined a proposal which includes an ESM-ECB debt swap, significant fiscal and investment reforms and further debt relief as part of the program.

Gold for August delivery, the most actively traded contract, dropped $1.30 or 0.1 percent, to settle at $1,157.90 an ounce, on the Comex division of the New York Mercantile Exchange on Friday.

Gold for August delivery scaled an intraday high of $1,164.50 and a low of $1,156.40 an ounce.

On Thursday, gold prices dropped $4.30 or 0.4 percent, to settle at $1,159.20 an ounce, with investors opting for riskier equity assets and global markets rebounding following a massive sell-off a day earlier.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, edged lower to 707.55 tons on Friday, from its previous close of 709.37 tons on Thursday.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 96.02 on Friday, down from its previous close of 96.27 on Thursday in late North American trade. The dollar scaled a high of 96.40 intraday and a low of 95.45.

The euro trended higher against the dollar at $1.1136 on Friday, as compared to its previous close of $1.1038 in North American trade late Thursday. The euro scaled a high of $1.1216 intraday and a low of $1.1032.

In economic news, wholesale inventories in the U.S. increased much more than expected in May, a report from the Commerce Department showed Friday. Wholesale inventories increased by 0.8 percent in May after rising 0.4 percent in April. Economists expected inventories to rise by 0.3 percent.

From Europe, Germany's wholesale prices continued to decline in June, figures from Destatis showed Friday. Wholesale prices dropped 0.5 percent year-on-year in June, slightly faster than May's 0.4 percent fall. The wholesale price index has been falling since July 2013.

French industrial output recovered as expected in May, the statistical office Insee reported Friday. Industrial output grew 0.4 percent month-on-month in May, reversing a 0.8 percent fall in April. This was the fastest growth in three months. The monthly rate matched economists' expectations.

Britain's trade deficit in goods in May was the smallest in nearly two years as imports declined and exports remained unchanged, data from the Office for National Statistics showed Friday. The visible trade deficit for May was GBP 8 billion, which was the smallest shortfall since June 2013. It was also smaller than the GBP 9.7 billion deficit predicted by economists.

U.K. construction output declined for the second straight month in May, defying economists' expectations for an increase, data from the Office for National Statistics showed Friday. Construction output fell 1.3 percent month-over-month in May, faster than previous month's 0.5 percent drop. Economists expected an increase of 0.8 percent for the month.