Gold turns higher after U.S. data disappoints, Greece talks in focus

Investing.com - Gold prices shook off earlier losses to trade modestly higher on Monday, after disappointing U.S. economic data dampened optimism over the strength of the economy and added to uncertainty over the timing of a U.S. rate hike.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery inched up $2.20, or 0.19%, to trade at $1,181.40 a troy ounce during U.S. morning hours. Futures held in a range between $1,172.10 and $1,185.80.

On Friday, gold prices dipped $1.20, or 0.1%, to close at $1,179.20. Futures were likely to find support at $1,174.30, the low from June 10, and resistance at $1,187.40, the high from June 11.

The Federal Reserve said that industrial production declined by 0.2% in May, disappointing expectations for a gain of 0.3% and following a drop of 0.5% in April.

The report came after the Federal Reserve Bank of New York said that its general business conditions index fell to -2.0 in June from a reading of 3.1 in May. Analysts had expected the index to rise to 6.0 this month.

The weak data dampened optimism over the strength of the economy and triggered speculation that the Fed could delay hiking interest rates until late 2015, instead of tightening as early as September.

Gold traders are now looking ahead to Wednesday’s Fed rate statement for a clear signal on when it could start to raise interest rates.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.2% to 95.43 early on Monday.

Meanwhile, the euro was under pressure after last ditch talks between Greece and its international creditors ended without an agreement on a cash-for-reforms deal on Sunday night.

Investors were looking ahead to a meeting of euro zone finance ministers on Thursday, which was being seen as Greece's last chance to strike a deal. Failure to strike a deal would result in Greece defaulting on payments and exiting the euro zone.

Also on the Comex, silver futures for July delivery rose 14.3 cents, or 0.9%, to trade at $15.96 a troy ounce. Silver lost 13.5 cents, or 0.85%, on Friday to end at $15.82.

Elsewhere in metals trading, copper for July delivery slumped 3.3 cents, or 1.22%, to trade at $2.645 a pound as worries over the health of China's economy dampened the appeal of the red metal.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption.