The rise in gold prices slipped slightly Wednesday morning. The decline was blamed on the rising dollar due to fading positive news from the Greek bailout and negative economic data from China. Spot gold was trading at $1,755.70 a troy ounce, down $4.60 from Tuesday’s settlement.
Excitement over the bailout deal faded, with European stocks logging midweek loses. U.S. stock market futures also pointed to a slightly weaker open.
Greece remained in the headlines after Fitch Ratings cut Greece’s sovereign credit rating to C from CCC and said the planned bond swap for private debt holders will amount to a restricted default.
The euro was little changed versus the dollar after Greece sent debt-swap and austerity measures to parliament for approval. Gold rose 12 per cent this year after a 10 per cent increase in 2011, an eleventh consecutive annual gain.
Euro-area finance ministers awarded 172 billion dollar in aid to Greece and reached an accord for greater debt relief from investor representatives in an exchange offer to tide the nation past a bond redemption next month.
A day earlier, futures for precious and base metals rose on news that Beijing had cut reserve requirements for lenders in an effort to boost lending and increase liquidity in China, a big user of metals and other resources.
China’s physical demand has slowed since the Lunar New Year celebrations in January, and India’s demand from its jewellery sector is also declining, Poon added.
Technical analysis suggested that spot gold could break above $1,760 and trade in the range between $1,766 and $1,771 during the day, said Reuters market analyst Wang Tao.