Azernews.Az

By Bloomberg

Gold dropped for the first time in three days as investors assessed the timing of an interest-rate increase by the Federal Reserve amid the turmoil in Greece.

Bullion for immediate delivery fell as much as 0.3 percent to $1,167.09 an ounce and traded at $1,168.34 by 2:32 p.m. in Singapore, according to Bloomberg generic pricing. Prices rose 0.1 percent on Monday, paring a 0.6 percent gain, as a stronger dollar overshadowed haven demand spurred by the Greek crisis.

Unruffled by risks that Greece will exit the euro, gold’s main role now is as a proxy for the timing and likelihood of a U.S. rate increase, according to Barclays Plc. Higher borrowing costs and a stronger dollar curb the appeal of the metal, which generally offers returns only through price increases. European finance ministers and leaders gather Tuesday for an emergency meeting after Greek voters rejected demands for more austerity.

“There is increasing evidence that gold cannot hold its weight even in the face of a jittery market,” said Howie Lee, an investment analyst at Phillip Futures Pte in Singapore, referring to the Greek crisis. “The boring reality remains that gold prices have, year-to-date, been moved by speculation over the rate hike.”

The Bloomberg Dollar Spot Index traded near a one-month high. The gauge jumped 18 percent in the past year on prospects for the first increase in U.S. rates since 2006.

Futures for delivery in August declined 0.5 percent to $1,167.10 an ounce. Bullion of 99.99 percent purity lost as much as 0.4 percent to 232.70 yuan a gram ($1,165.67) on the Shanghai Gold Exchange and was little changed at 233.80 yuan.

Spot silver retreated 0.3 percent to $15.698 an ounce. Platinum slid 0.2 percent to $1,061.38 an ounce after a 3.2 percent drop to a six-year low of $1,048.28 on Monday. Palladium fell 0.2 percent to $681.98 an ounce, extending a three-day decline.