Gold Caught Between Greece and Strong USD

06/16/2015 9:00 am EST

Focus: CURRENCIES

Alfonso Esparaza

Senior Currency Strategist, OANDA

OANDA senior currency strategist Alfonso Esparza examines how Gold was little changed Monday as the impact of a stronger USD ahead of the FOMC was offset, yet again, by the uncertainty surrounding Greece. Alfonso also suggests that a rate hike could boost the dollar further and diminish demand for the non-interest-paying yellow metal.

Gold was little changed on Monday as the impact of a stronger dollar ahead of a Federal Reserve policy meeting was offset by persistent uncertainty around Greece after debt talks with its creditors stalled.

Spot gold was unchanged at $1,180.90 an ounce by 1143 GMT, while US gold futures for August delivery were up $1.40 an ounce at $1,180.40.

The dollar rose 0.3% against a basket of major currencies, making dollar-denominated gold more expensive for holders of other currencies.

Investors hoped the Federal Reserve could offer a clear signal on the timing of its first interest rate hike in nearly a decade during its June 16-17 policy meeting.

“Yellen can now be a bit more optimistic about growth, maybe she will intimate that the path is being prepared for a rate rise (by year-end),” Societe Generale analyst Robin Bhar said.

A rate hike could boost the dollar further, in turn diminishing demand for non-interest-paying gold.

By Alfonso Esparza,Senior Currency Strategist, OANDA

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