Gold prices ease as Greece debt worries recede

Gold eased yesterday after receding worries about Greece's debt crisis quashed some of the appetite among investors for safe havens, while the rise in the single European currency dented the euro price of bullion. Gold came off a four-week high of $1,540.50 (Dh5,658) hit in the previous session, as European officials met to sketch out options for a second bailout package for Greece, boosting investor risk appetite. Gold in euros slipped to its lowest since May 20 as the single European currency hit four-week highs against the US currency, while gold in dollars fell for a second day, down 0.2 per cent at $1,531.99 an ounce by 0955 GMT. Gold fell by about 2 per cent in May, although the price remained on track for a near-8 per cent gain this year, fuelled in large part by investor nerves over the euro zone's finances. "Whether it's Greece or whether it's the potential ramifications for Italy or Spain, that is a big bid to the gold market," said Natixis commodities analyst Nic Brown. "The general theme has certainly been events in Greece and Europe, which have been behind this last move, which is so obvious in the euro-denominated price of gold and probably the fact that the euro has rebounded, which is slowing that down." Investor demand for gold retreated in May, as reflected in the net outflow of metal from global exchange-traded funds, which fell nearly 1 per cent last month in their first monthly decline since February. "Technically, it looks like that gold might be going low, but I don't see any justification for it to break much below $1,520," said Darren Heathcote, head of trading at Investec Australia. "I don't think we are close to having it [the Greek debt crisis] completely solved yet, and the market will remain sceptical and well supported." Mexico's central bank expanded its gold holdings in April, buying 190,000 ounces of gold, worth nearly $282 million based on average spot price of the month, after buying more than $4 billion in bullion in March. Physical market On the physical market, dealers earlier spotted light scrap selling from Thailand, and muted buying from India and China. Meanwhile, spot silver declined 0.9 per cent to $38.09. US silver eased half a per cent to $38.11. It fell 21.1 per cent in May, leading losses in the commodities market. ETF holdings of the metal fell for a second consecutive month in May, dropping by over 40 million ounces to their lowest this year.