Forexpros – Gold prices dropped Friday after Greece failed to meet commitments to economic austerity to obtain aid and avoid default, which sparked a run to the greenback.
A rising dollar often sends gold falling as the two assets normally trade inversely from one another.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,721.55 a troy ounce, down 1.13%.
Gold futures were likely to test support at USD1,706.85 a troy ounce, an earlier Friday low, and resistance at USD1,754.95, Thursday’s high.
Multilateral institutions arranging a EUR130 billion bailout fund for Greece, including the European Union, the European Central Bank and the International Monetary Fund, decided that Athens failed to meet spending targets and rejected the country’s appeal for aid.
The news sent the euro weakening and the dollar rising, which prompted a gold selloff in global metals markets.
Weak earnings in the U.S. plus a widening trade gap there further sent investors ditching risk and parking their money the dollar.
“Gains in the U.S. dollar and consistent disappointment from the European Union regarding the Greece debt deal are curbing any gains in gold,” said Pradeep Unni, senior analyst at Richcomm Global Services, according to Reuters.
Elsewhere on the Comex, silver for March delivery was down 1.05% and trading at USD33.560 a troy ounce, while copper for March delivery was down 3.03% and trading at USD3.858 a pound.
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