Gold Drops a Third Day on Greece Bailout Deal, Fed Rate Outlook

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Gold fell for a third straight session after Greece secured a deal paving the way to a new bailout and as investors weighed the timing of a U.S. interest-rate increase.

Greece agreed with creditors on the reforms needed to start formal negotiations over a third bailout program in five years and remain in the euro region. Gains in the dollar added to selling pressure in gold, which has posted three straight weekly declines.

The Greek deal reduces demand for the metal as a haven asset, extending losses as the Federal Reserve signals it plans to boost interest rates. Fed Chair Janet Yellen maintained her call for a rate increase this year, curbing the appeal of bullion, which doesn’t pay interest or give returns like assets such as bonds and equities.

“Everybody was going into gold because they thought the euro would collapse and the whole world would fall apart,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. Gold “is temporarily not needed,” he said.

Gold futures for delivery in August fell 0.2 percent to settle at $1,155.40 an ounce at 2:04 p.m. on the Comex in New York.

The Bloomberg Dollar Spot Index, a gauge of the greenback’s strength against 10 major currencies, climbed as much as 0.7 percent, reducing the allure of bullion as an alternative asset.

Holdings in exchange-traded products backed by gold slipped for a third session on Friday, declining 1.3 metric tons to 1,585.3 tons, near the lowest since 2009.

Silver futures for September delivery fell 0.2 percent to $15.457 an ounce, the first drop in four sessions.

Platinum futures for October delivery added 0.4 percent $1,036 an ounce on the New York Mercantile Exchange. Palladium futures for September delivery climbed 1.3 percent to $658.95 an ounce.

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