Gold futures edged lower Thursday as investors weighed weaker manufacturing data against the weaker dollar. The most actively traded contract, for August delivery, fell $1.50, or 0.1%, to settle at $1,564.20 a troy ounce.
Gold's losses were muted by a weaker dollar, as the currency eased on the data. Investors using foreign currency favor dollar-denominated gold when the dollar eases, as the precious metal becomes cheaper for these buyers.
Gold's declines over May slashed more than $100 off the price of a troy ounce and amounted to a 6.1% slide in prices. This marks the biggest monthly percentage drop in gold since December 2011, when prices fell 10.5% on the month.
As long as the debt crisis is still in focus, risk aversion will remain high and copper has the potential to go even lower, About $4.5 trillion was wiped from the value of global equities last month and the dollar climbed to the highest level in almost two years versus the euro as the turmoil in Europe spread. The European Commission challenged Germany’s remedies to the financial crisis on May 30, calling for direct euro-area aid for troubled banks. An opinion poll showed May 30 most Greeks want to see the terms of a financial rescue revised, stoking fears the nation may default and be forced to exit the euro.
While Germany helped the euro area avoid a second recession in three years in the first quarter, the International Monetary Fund predicts the region will contract 0.3 percent this year. An index of executive and consumer sentiment in the 17-nation bloc fell to 90.6 from a revised 92.9 in April, the commission said May 30. The Conference Board’s U.S. consumer index fell to 64.9 last month from a revised 68.7 in April, May 29 data show.
Global Growth
Chinese industrial companies’ earnings declined 2.2 percent from a year earlier, the National Bureau of Statistics said on its website May 27. Still, China’s 8.2 percent growth this year will help the global economy expand 3.5 percent, the IMF estimates. Goldman Sachs Group Inc. still expects Chinese demand to drive copper prices to $9,000 in three months.
Thirteen of 28 traders and analysts surveyed by Bloomberg said gold would gain next week and five were neutral. Futures on the Comex in New York are little changed at $1,567.80 an ounce since the start of January after climbing the previous 11 years.
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