Gold slips in Europe

Gold slipped 1 percent on Monday as the dollar rose against the euro after leaders struck a deal to negotiate a Greek bailout, while signals the Federal Reserve was still on track to raise rates this year also weighed. Greece won conditional agreement to receive a possible $95 billion over three years. Spot gold fell to a session low of $1,150.78 an ounce earlier and was down 0.9 percent at $1,153.52 an ounce by 1400 GMT, after posting three straight weekly declines.
US gold for August delivery fell 0.5 percent to $1,151.50 an ounce. Gold, typically viewed as an alternative investment in times of financial and economic uncertainty, had not seen significant retail buying as a result of the Greek crisis, due generally to a robust dollar and prospects of higher US interest rates, which would increase the opportunity cost of holding gold. "Gold has failed to perform throughout the crisis, while the expectation for a rate hike in the US has gone on for so long that the gold price is now close to the cost of production," bullion broker Sharps Pixley CEO Ross Norman said.
The dollar rose 0.6 percent against a basket of currencies, mostly due to a weaker euro, while global shares rose, further diminishing investor appetite for assets perceived as safer, such as gold. Also a drag on gold were signals from Federal Reserve Chair Janet Yellen on Friday that the US central bank is on course to raise interest rates within this year. Yellen said while the US economy should grow steadily for the remainder of the year, allowing the Fed to raise rates for the first time in nearly a decade, labour markets remained weak.
"We are 50/50 between a rate hike in September and one in December and that's part of the reason we are seeing gold falling towards $1,100 in the fourth quarter," Deutsche Bank analyst Michael Lewis said. Hedge funds and money managers bailed out of COMEX gold and silver futures and options at the fastest pace in at least a year in the week to July 7, data showed. Physical demand for gold was tepid last week as prospective investors in China chased bargains in equities after a market selloff, while those in India delayed purchases. Silver dropped 1.5 percent to $15.35 an ounce, palladium rose 1.1 percent to $656.25 an ounce and platinum fell 0.4 percent to $1,024.74 an ounce.