Gold futures on the COMEX division of the New York Mercantile Exchange fell on Wednesday as the U.S. dollar's strength offset investors' fears over the Greek default.
The most active gold contract for August delivery dropped 2.5 U. S. dollars, or 0.21 percent, to settle at 1,169.30 dollars per ounce.
Gold was put under pressure as the U.S. Dollar Index rose by 0. 74 percent to 96.23 as of 12:53 GMT. The index is a measure of the dollar against a basket of major currencies. Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors.
Analysts believe that many investors are using the U.S. dollar as a safe haven instead of gold in the wake of the Greek government defaulting on a payment to the International Monetary Fund because of the future potential for an increase in the U.S. interest rate, which is putting additional pressure on the precious metal. When the U.S. interest rate rises it drives investors to interest-bearing assets such as equities instead of gold because the precious metal does not give any returns.
The Institute for Supply Management also released a report on Wednesday that put pressure on gold as it reported the primary June manufacturing index at 53.5. The employment component of the index rose nearly 4 points to 55.5 from May. Analysts say this is significant for this reading and put pressure on gold.
Silver for September delivery fell 0.4 cents, or 0.03 percent, to close at 15.577 dollars per ounce. Platinum for October delivery added 8.3 dollars, or 0.77 percent, to close at 1,087.80 dollars per ounce.