Gold fell the most in four weeks amid speculation that months of impasse will end as Greece and its creditors reach an aid deal, reducing demand for the metal as a haven.
Global equities climbed after Greece presented a new plan to stave off default, with the Stoxx Europe 600 Index gaining the most in six weeks. The rally for shares spurred less investor interest in precious metals, and gold trading was about 18 percent below the 100-day average for this time, data compiled by Bloomberg show.
“There seems to be fair amount of optimism, you can see that in European stock markets,” Tai Wong, the director of commodity-products trading at BMO Capital Markets Corp. in New York, said in a telephone interview. “That detracts from the safe-haven value of gold.”
Gold futures for August delivery fell 1.5 percent to settle at $1,184.10 an ounce at 1:47 p.m. on the Comex in New York, the biggest decline since May 19.
Prices are dropping after last week capping the biggest rally in a month on signs from the Federal Reserve that increases for U.S. interest rates will be slow. Still, policy makers indicated that they’re on track to tighten monetary policy this year.
Gold may fall to $1,050, the lowest since February 2010, as rates rise, Mitsubishi Corp. forecast last week. Higher rates curb bullion’s allure because the commodity doesn’t pay interest or give returns like other assets such as bonds and equities.
Silver futures for July delivery added 0.2 percent to $16.142 an ounce on the Comex.
On the New York Mercantile Exchange, palladium futures for September delivery dropped 1.7 percent to $695.45 an ounce, after touching $690.50, the lowest since September 2013. The metal, which fell for an eighth straight session, tumbled into a bear market last week amid ample global supplies. Platinum futures for July delivery fell 2.4 percent to $1,060.60 an ounce, the biggest drop in four months. The price earlier touched $1,058.60, the lowest since March 19, 2009.