Investing.com -- Gold futures ticked up modestly on Thursday halting a two-day skid, as slowing developments in Greek debt negotiations and a sell-off of Chinese equities limited more lucrative gains.
On the Comex division of the New York Mercantile Exchange, gold for August delivery gained 2.30 or 0.19% to $1,188.80 a troy ounce. Gold futures plunged to a session-low of $1,181.10 in European afternoon trading before rallying soon thereafter. During U.S. morning trading, gold reached a session-high of 1,192.40 its highest level since falling sharply on Tuesday amid strong gains in the dollar.
Downward pressures have weighed on the precious metal since it soared to a three-month high of 1,232.80 on May 15. Before Thursday’s minute gains, gold had closed lower on six of the previous eight sessions.
Gold likely gained support at 1,178.00 the low from May 11 and was met with resistance at 1,214.20, the high from May 20.
In China, stocks on the Shanghai Composite Index tumbled more than 6%, its largest decline in four months, after two major securities firms tightened margin requirements for lenders. Following the lead of two of its top competitors, Changjiang Securities upped its margin requirement or the collateral put up by an investor when borrowing, from 60% to 80% on Wednesday evening. Guosen Securities, a prominent Shenzhen-based firm, also increased its margin limits for 908 counter stocks. The Shanghai Composite Index has gained more than 125% in part due to the high level of margin financing from investors who have leveraged their bets with borrowed money.
China is the world’s largest consumer of gold and second-largest purchaser behind India.
Elsewhere, there were little developments in Brussels where Greek officials continued to meet with representatives from the International Monetary Fund, European Central Bank and European Commission in an effort to reach an agreement on a bailout that could unlock critical aid the beleaguered nation may require to stave off bankruptcy. One day earlier, Greece prime minister Alexis Tsipras said the sides had moved closer to striking a deal after beginning the initial process of drafting a technical level agreement. European officials reportedly have downplayed the developments.
A deal in the four-month stalemate could free up the remaining €7.2 billion of a 240 billion bailout euro zone creditors have provided to the cash-strapped Mediterranean nation. Greece is in desperate need of the stimulus package as it reportedly grows closer to running out of cash by the day. Before the deadline to reach an agreement expires at the end of June, Greece owes approximately €1.6 billion to the International Monetary Fund over several payments due next month.
Gold is considered to be a safe haven for investors in periods of severe economic instability.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell 0.16 to 97.19.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for July delivery gained 0.021 or 0.13% to 16.668 an ounce.
Copper for July delivery fell 0.002 or 0.06% to 2.767 a pound.