Gold inches up as markets await Greece developments

Investing.com - Gold prices edged higher on Tuesday, investors continued to monitor developments surrounding talks between Greece and its international creditors, amid hopes that a deal was within sight.

Euro zone finance ministers failed to reach agreement over Greece’s bailout at an emergency meeting on Monday, but indicated that a final deal could be made later this week.

Eurogroup head Jeroen Dijsselbloem said new reform proposals from the Greek government were “broad and comprehensive,” and a good basis to restart stalled negotiations.

But German Chancellor Angela Merkel and International Monetary Fund head Christine Lagarde both warned that there was still a lot of work to be done.

Greece’s existing bailout is set to expire at the end of this month, when it must also repay €1.6 billion to the IMF. A default by Greece could trigger the country’s exit from the euro zone.

Gold futures for August delivery on the Comex division of the New York Mercantile Exchange tacked on $1.60, or 0.14%, to trade at $1,185.70 a troy ounce during European morning hours.

Futures were likely to find support at $1,173.90, the low from June 17, and resistance at $1,205.70, the high from June 18.

A day earlier, gold tumbled $17.80, or 1.48%, to close at $1,184.10 after data showed that U.S. existing home sales in May rose to the highest level since November 2009.

The National Association of Realtors said that existing home sales increased 5.1% to 5.35 million units last month from 5.09 million in April. Analysts had expected existing home sales to rise 4.4% to 5.26 million units in May.

The upbeat data boosted optimism over the health of the economy and supported the case for a U.S. interest rate hike later this year.

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.