Investing.com - Gold prices declined on Tuesday, as the U.S. dollar rallied to a one-month peak amid ongoing Greek debt worries.
Gold futures for August delivery on the Comex division of the New York Mercantile Exchange shed $6.00, or 0.51%, to trade at $1,160.60 a troy ounce during U.S. morning hours. Futures were likely to find support at $1,155.80, the low from July 2, and resistance at $1,180.00, the high from June 30.
Also on the Comex, silver futures for September delivery declined 13.3 cents, or 0.85%, to trade at $15.49 a troy ounce.
The dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 1% to 97.40 early Tuesday, the strongest level since June 2.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
The euro came under heavy selling pressure as Greek Prime Minister Alexis Tsipras was to present new proposals to euro zone finance ministers later in the day, ahead of a meeting of European leaders, in what could be Greece's final opportunity to strike a deal with its international lenders.
Failure to reach an agreement would increase the likelihood of Greece leaving the single currency union.
Without a bailout agreement in place Greece may default on a €3.5 billion payment owed to the European Central Bank on July 20. Greece last week defaulted on a €1.6 billion loan repayment to the International Monetary Fund.
Greek banks were set to remain closed on Tuesday after capital controls were extended until Wednesday, amid concerns that lenders are close to running out of cash.
The European Central Bank announced Monday that it would keep its emergency liquidity assistance to Greece unchanged at levels announced last Monday. The ECB also said it will adjust the haircuts on collateral accepted by the Bank of Greece as part of the ELA, adding to pressure on Athens.
On Monday, gold jumped $9.70, or 0.83%, to close at $1,173.20 after Greek voters overwhelmingly rejected conditions of a rescue package from creditors in a weekend referendum, adding to doubts over the country's future in the euro zone and deepened a standoff with its lenders.
Elsewhere in metals trading, copper for September delivery tumbled 5.4 cents, or 2.13%, to trade at a five-month low of $2.472 a pound, as mounting losses on Chinese stock markets dampened appetite for the red metal.
Shares in China resumed their decline despite efforts by the government to calm the market. The Shanghai Composite tumbled nearly 3% in volatile trade on Tuesday. The index is down almost 32% over the past three weeks.
Policymakers in Beijing announced the suspension of initial public offerings over the weekend and corralled its leading brokerages to establish a RMB120 billion fund to support the country's battered stock market.
Market players are concerned that the recent plunge in the stock market could spread to other parts of the economy, triggering fears that China’s demand for the industrial metal will decline.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.