Gold Ends Lower On Greece Concerns, Rising Equity Markets

(RTTNews) - Gold futures ended lower on Tuesday, on a strengthening dollar with investors opting for the riskier equity assets with most global markets trending higher. Investors continued to closely monitor developments in Europe with the potential Greek exit a real possibility.

Greece's bailout program offered by the European Commission, the European Central Bank and the IMF is set to expire on February 28. Greece has tried to renegotiate the bailout terms, but the EU has rejected the request saying that the bailout conditions were generous.

However, there are speculations that the European Union may offer Greece with a six-month extension.

The speculation of a rate hike continued unabated after some Fed officials last week said the U.S. economy is on solid footing and low inflation due to collapsing energy prices would prove temporary.

Gold for April delivery, the most actively traded contract, shed $9.30 or 0.8 percent to settle at $1,232.20 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday.

Gold for April delivery scaled an intraday high of $1,245.90 and a low of $1,231.80 an ounce.

On Friday, gold ended at $1,241.50 an ounce, up $6.90 or 0.6 percent, amid anxiety over a potential Greek exit from the eurozone and timing of the U.S. Federal Reserve's rate hike following the better-than-expected U.S. jobs report last week.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 773.31 tons on Tuesday from its previous close on Monday.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 94.72 on Tuesday, down from its previous close of 94.51 late Monday in North American trade. The dollar scaled a high of 94.88 intraday and a low of 94.40.

The euro trended lower against the dollar at $1.1311 on Tuesday, as compared to its previous close of $1.1326 late Monday in North American trade. The euro scaled a high of $1.1347 intraday and a low of $1.1275.

On the economic front, a Commerce Department report on Tuesday showed U.S. wholesale inventories edged slightly higher in December, after having reported a notable increase last month. Wholesale inventories inched up by 0.1 percent in December after climbing by 0.8 percent in November. Economists expected inventories to edge up by 0.2 percent.

Chinese inflation slowed to a five-year low in January on easing food inflation, providing space for the central bank to adjust monetary policy to support weakening economic growth. Inflation eased more-than-expected to 0.8 percent in January from 1.5 percent in December, the National Bureau of Statistics said Tuesday. This was the lowest since November 2009. The annual rate was seen at 1 percent.

Producer prices in China witnessed the biggest fall since late 2009, slipping 4.3 percent year-on-year following a 3.3 percent drop a month ago, exceeding the 3.8 percent drop economists expected.

U.K. industrial production declined more-than-expected in December as maintenance work in the North Sea fields dragged oil output, while the manufacturing sector managed to expand, albeit at a slower pace. Industrial production fell 0.2 percent from the prior month, after staying flat in November, the Office for National Statistics said Tuesday. It was expected to fall by 0.1 percent.

Meanwhile, unemployment rate across member nations of the Organization for Economic Cooperation and Development dropped to 7.1 percent in December from 7.2 percent in November. In the euro area, the jobless rate slid marginally to 11.4 percent from 11.5 percent in November. The unemployment rate in the United States declined to 5.6 percent from 5.8 percent.

French industrial output recovered at a stronger than expected pace in December, data from the statistical office Insee showed Tuesday. Industrial production advanced 1.5 percent in December from November, when it was down 0.2 percent. Economists had forecast industrial output to grow only 0.3 percent.