Gold futures ended sharply lower on Tuesday, as the dollar strengthened against some major currencies, even as a crucial Eurogroup summit on Greece is underway, which could provide Athens with another opportunity to stay in the eurozone.
Greece on Sunday rejected the bailout plan demanded by its international creditors in a referendum, boosting the chances of the beleaguered country exiting the eurozone. Greek voters over the weekend rejected harsh austerity measures that were once agreed to as part of their rescue plan. The Greek stock market and banks will remain closed until Thursday.
Eurogroup President Jeroen Dijsselbloem after the first summit meeting on Tuesday revealed that Greece will make a formal request for financial assistance through the European Stability Mechanism on Wednesday. The request will be discussed at length by eurozone finance ministers.
The dollar continued to advance against the euro, touching $1.10 to the euro ahead of a crucial summit on Greece. A strong dollar tends to discourage buying in dollar-priced commodities as it makes them more expensive to holders of other currencies.
Gold for August delivery, the most actively traded contract, dropped $20.60 or 1.8 percent, to settle at $1,152.60 an ounce, on the Comex division of the New York Mercantile Exchange on Tuesday.
Gold for August delivery scaled an intraday high of $1,170.00 and a low of $1,146.80 an ounce.
On Monday, gold prices gained $9.70 or 0.8 percent, to settle at $1,173.20 an ounce, after Greece rejected the bailout plan demanded by its international creditors with an increasing likelihood of exiting the Eurozone.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 709.65 tons on Tuesday, from its previous close of 711.44 tons.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 96.98 on Tuesday, up from its previous close of 96.25 on Monday in late North American trade. The dollar scaled a high of 97.24 intraday and a low of 96.31.
The euro trended lower against the dollar at $1.0963 on Tuesday, as compared to its previous close of $1.1056 in North American trade late Monday. The euro scaled a high of $1.1060 intraday and a low of $1.0917.
In economic news, a Commerce Department report on Tuesday showed U.S. trade deficit to have widened in May, with the value of exports falling much more than the value of imports. U.S. trade deficit widened to $41.9 billion in May from a revised $40.7 billion in April. Economists expected the deficit to widen to $42.7 billion.
From Europe, Germany's industrial production remained unchanged in May from the prior month, Destatis reported Tuesday. Production was forecast to rise 0.1 percent after expanding 0.6 percent in April, which was revised down from 0.9 percent.
The French trade deficit increased in May due to a fall in exports amid increasing imports, the customs office reported Tuesday. The trade deficit widened to EUR 4.02 billion in May from EUR 3.3 billion in April. It was larger the expected shortfall of EUR 3.6 billion.
U.K industrial output expanded unexpectedly in May on strong oil and gas production, figures from the Office for National Statistics showed Tuesday. Industrial production rose 0.4 percent month-over-month in May, defying economists' expectations for a 0.2 percent fall. It was the fourth consecutive monthly gain.
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