BLBG:Gold Climbs to Two-Week High as Greek Vote Fails to Allay Default Concerns
Gold advanced to a two-week high on concern that the Greek government, after winning a vote of confidence, may struggle to pass austerity measures needed to avoid default on its debt.
Gold for immediate delivery gained as much as 0.3 percent to $1,550.93 an ounce, the highest since June 6. The metal was little changed at $1,547.10 an ounce at 10:11 a.m. in Singapore. The August-delivery contract was also little changed at $1,547.90 an ounce.
Greek Prime Minister George Papandreou won support from 155 out of 300 lawmakers. The ballot cleared the way for a separate vote on a 78 billion-euro ($112 billion) package of budget cuts and asset sales to ensure the payment of 12 billion euros due in July under last year’s 110 billion-euro bailout from the European Union and the International Monetary Fund.
“People over the next couple of weeks will still be drawn to it,” said David Lennox, a resource analyst at Fat Prophets in Sydney, referring to gold. “There is a tradeoff between what will happen from the political point of view and what may happen in terms of what the population may try and force.”
European Union leaders have insisted Papandreou secure multi-party support for the austerity plans. The premier will now meet his counterparts at a summit in Brussels starting tomorrow that will discuss a new financing package to shield Greece from record borrowing costs for as many as three years.
“Because the vote was so close, I think it will still be a thorn in the side for some time,” Lennox said. “We still may see some active agitation from the populace that may continue to put that risk flavor back into the Greek situation.”
Euro Weakens
The euro weakened from a one-week high against the dollar after Papandreou won the parliament vote. Europe’s shared currency fell 0.3 percent to $1.4365 as of 10:48 a.m. in Singapore after earlier appreciating to $1.4434, the strongest level since June 15.
Gold has advanced 8.9 percent this year and touched a record $1,577.57 on May 2 as escalating sovereign-debt woes and record-low U.S. borrowing costs increased the appeal of bullion as an alternative to currencies.
Silver for immediate-delivery was little changed at $36.36 an ounce. Spot palladium fell 0.2 percent to $767.75 an ounce, and cash platinum gained 0.3 percent to $1,752.80 an ounce.
To contact the reporter for this story: Phoebe Sedgman in Wellington at psedgman2@bloomberg.net.
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
