Azernews.Az

By Bloomberg

Gold held near the lowest level since March as the dollar traded near a five-week high amid a China-led equity market rout across Asia and the continuing Greek debt crisis. Silver traded above the lowest close in five years.

Gold weakened alongside other commodities and risk assets as Chinese stocks fell to a three-month low after government support measures failed to revive confidence. In Europe, the Greek government was warned that it faced the possibility of being forced out of the euro.

Gold slumped for the past four quarters in the longest run since 1997 on speculation the U.S. Federal Reserve will increase interest rates. Higher borrowing costs and a stronger greenback curb bullion’s appeal, which generally offers returns only through price gains.

“Gold has become more of a risk trade than a safe haven, it is more focused on U.S. macroeconomics,” Jonathan Butler, a precious-metals strategist at Mitsubishi Corp. in London, said by phone. “The biggest challenges facing gold right now are the stronger dollar and higher real interest rates.”

Gold for delivery in August was 0.2 percent higher at $1,155.30 an ounce by 7:24 a.m. on the Comex in New York. Bullion for immediate delivery was little changed at $1,157.46, after falling to the lowest since March, according to Bloomberg generic pricing. The metal lost 2.3 percent this year.

In China, where share markets sank despite state efforts to stem losses, bullion of 99.99 percent purity lost as much as 2.1 percent to 229 yuan a gram on the Shanghai Gold Exchange, the lowest since December.

Dollar Index

The Bloomberg Dollar Spot Index traded near a five-week high. The gauge jumped 19 percent in the past 12 months on prospects for the first U.S. rate rise since 2006.

Silver for September delivery was little changed at $14.975 an ounce, after ending Tuesday at $14.969, the lowest settlement since February 2010.

Precious metals trading volumes rose on the Comex, with 35 percent more gold contracts traded than the 100-day average for the time of day. Silver, platinum and palladium volumes were at least double the average.

Platinum for October delivery fell 1.5 percent to $1,025.70 an ounce, after dropping earlier Wednesday to a six-year low of $1,010.90. Palladium for September retreated 1.7 percent to $641.15 an ounce and touched the lowest since 2012.

Both metals are used in vehicle pollution control-devices. China’s passenger-vehicle sales fell for the first time in more than two years last month, according to data on Wednesday. Retail deliveries of cars, multipurpose vehicles and SUVs fell 3.2 percent in June from a year earlier, the China Passenger Car Association said.