Gold Trades Near Three-Month Low as Fed Outlook Trumps Greece

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Gold traded near a three-month low as the outlook for higher U.S. interest rates this year outweighed demand for a haven spurred by Greece’s debt crisis. Palladium declined.

Investors’ focus shifted to when the Federal Reserve will raise interest rates before Greece’s weekend referendum on austerity measures that may help to determine whether the country remains in the euro zone. A Labor Department report on Thursday showed U.S. companies added 223,000 jobs in June while wages stagnated and the size of the labor force receded.

“Gold has disappointed in how it reacted to Greece,” Dan Smith, a senior adviser at Oxford Economics, said by phone from London on Friday. “The U.S. has hit a soft patch, but our view is still that they will raise rates sooner rather than later.”

Gold for immediate delivery added 0.2 percent to $1,168.69 an ounce at 4:16 p.m. in New York, according to Bloomberg generic pricing. On Thursday, the metal fell for the third straight day, touching $1,157.18, the lowest since March 18. The commodity has dropped 0.6 percent this week.

Futures for August delivery increased 0.4 percent to $1,167.80 on the Comex in New York, where floor trading was closed for a public holiday.

Polls show the outcome of Greece’s Sunday referendum on austerity is too close to call. Prime Minister Alexis Tsipras is campaigning for citizens to vote “no,” and vowed to sign off on creditor demands should people vote “yes.”

Job Signals

With U.S. jobs data signaling the economy is improving slowly following a first-quarter slump, Fed policy makers remain on track to raise rates later this year. Higher borrowing costs curb bullion’s allure because it doesn’t pay interest or give returns like other assets such as bonds and equities.

Holdings in gold-backed exchange-traded products fell for a fifth day on Thursday, the longest run in a month, data compiled by Bloomberg show. The assets are near a six-year low.

Silver for immediate delivery was little changed at $15.6975 an ounce. The price has dropped 0.7 percent this week.

Platinum fell 0.1 percent to $1,083.20 an ounce.

Palladium fell 1.2 percent to $685.55 an ounce. This week, the price has climbed 0.9 percent, snapping a seven-week slump.