BS: Gold steady as central banks pledge action on Greece
Buyers on sidelines ahead of Greek elections, with gold set for near 2% weekly gain on US easing talk
LONDON — Gold prices were steady on Friday as sellers were kept at bay by pledges from the world’s central banks for co-ordinated policy action ahead of Greek elections this weekend that could determine its continued membership in the euro zone.
No Greek party has called for euro exit, but the leftist Syriza party, which is running neck-and-neck with the conservative New Democracy party, rejects the terms of a bail-out struck in February, without which Greece will default.
Central banks said earlier they stood ready to provide liquidity and prevent a credit squeeze to deal with the risk of a Greek exit from the euro zone. European shares rose, while Spanish and Italian bond yields fell.
"Any chance of monetary easing is in the medium term positive (for gold)," said Credit Suisse analyst Tobias Merath. "We think the cyclical environment is not so bad but we’ve seen a lot of profit taking in the last two months. Every time people expect more deleveraging of banks, less lending (they) sell assets (like gold) to generate cash."
Spot gold was at $1624,80 an ounce at 1.23pm GMT against $1622,30 late on Thursday.
Prices are set to rise nearly 2% this week after soft US data and speculation the euro-zone crisis could hamper US growth fuelled talk of more quantitative easing from the Federal Reserve.
That is likely to undermine the dollar and lead to fresh volatility in the currency markets, potentially boosting interest in gold as an alternative asset. It tends to benefit from weakness in the US currency, in which it is priced.
US data out earlier showed a gauge of manufacturing in New York state fell sharply in June, and while it still showed growth, it was the latest data pointing to a sluggish economy in the US
"The next big event in the gold world is likely to be the Greek election," HSBC said in a note. "Gold may be caught between the election and US monetary expectations."
US gold futures for August delivery were up $3,90 an ounce at $1623,50.
RESISTANCE AT $1641/OZ
From a chart perspective, analysts who study past price patterns for clues as to the future direction of trade identify resistance for gold at $1641 an ounce. "Above there opens our $1700 target," Barclays Capital said in a note.
The world’s largest gold-backed exchange traded fund, the SPDR Gold Trust in New York, said its holdings rose just more than three tons on Thursday, their biggest one-day increase since June 1.
Among other precious metals, silver was up 0,2% at $28,65 an ounce. The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, rose back towards its 2012 high as gold outperformed.
Investors’ confidence in silver was battered by two sharp corrections last year, which saw the metal lose a third of its value in the six sessions after it hit record highs in April, and fall 36% in three days in September.
Spot platinum was down 0,3% at $1491,49 an ounce, while spot palladium was down 0,1% at $630,47 an ounce.
Platinum’s ratio to gold ticked back up on Friday as gold prices outperformed, having dropped back from five-month highs earlier in June. Platinum prices have received little support from threats to South African mine supply, which is being hampered by low metal prices.
"Platinum prices need to rise to about $1650 an ounce in order for South African platinum producers to be profitable," Natixis said in a weekly report. "Lower prices will lead to a protracted period of cutbacks and restricted development, which will bring the market back into equilibrium via a slowdown in future supply."
