Gold fell more than 1 percent on Friday to a six-week low, hurt by a drop in oil prices, gains in the dollar versus a currency basket, and Greece's approval of an austerity package, which cut the metal's appeal as a haven from risk. Spot gold fell as low as $1,481.70 an ounce, its weakest since May 17, and was bid at $1,483.24 an ounce at 1401 GMT, against $1,499.60 late in New York on Thursday. US gold futures for August delivery fell $19.10 to $1,483.70.
The metal came under pressure as the dollar index rebounded and US crude futures fell more than $2 a barrel on Friday after disappointing economic data from China, where factory output in June grew at the slowest pace in 28 months. The Greek parliament's acceptance this week of a package of austerity measures needed to obtain further funding from the European Union and International Monetary Fund has tempered some risk aversion in the market, curbing demand for gold.
"Without a Greek default or something similar, it is difficult to think of a catalyst that would send gold to new record highs," said Robin Bhar, an analyst at Credit Agricole. UBS analyst Edel Tully, noting that gold prices dropped sharply on this day for the last two years, said in a report: "Whether today will bring a hat-trick July 1 pullback could well depend on this afternoon's US ISM manufacturing print.
"While there is some concern that this could come in below 50, upside surprises from the Chicago PMI and NAPM-Milwaukee data over the past few days bode well for the ISM numbers." Gold is on track for a second consecutive weekly loss, of around 0.6 percent. In the world's biggest gold consumer, India, physical buying edged up as traders continued to see gold below the keenly watched $1,500 an ounce level as a bargain, but buying was muted due to a seasonal lull in demand.
"The Greek vote was broadly positive for base metals, negative for precious metals, which are still richly priced," said RBS Global Banking & Markets analyst Nick Moore. The white metals have outperformed gold this week, with platinum rising 1.7 percent and palladium up 3 percent, as a retreat in risk aversion benefited industrial metals more than gold.
Spot platinum was bid at $1,709.99 an ounce versus $1,720.15, while spot palladium was at $752.47 an ounce against $752.25. Silver was bid at $33.69 an ounce against $34.65. Holdings of the world's largest silver-backed exchange-traded fund, the iShares Silver Trust fell by 1.4 million ounces or just under 0.5 percent on Thursday, the fund said. The trust saw its biggest quarterly outflow since its launch in the three months to end June, data from on its website showed, as investors turned their backs on silver amid fears the metal's rally to record highs had been overdone.
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