BD: Gold in the doldrums, latest twists in Greek crisis have no sway
Gold traded in a tight range on Wednesday morning, shrugging off fresh reports over Greece after it missed Tuesday’s deadline for a 1.6-billion-euro repayment to the IMF.
The spot gold price was last at $1,171.20/1,172.00 per ounce, down $1.80 on Tuesday’s close and confined to an intraday range of just $4 so far above $1,170. Silver was down five cents at $15.60/15.65.
But the PGMs are bouncing back this morning – platinum was last up $9 at $1,083/1,088 per ounce and palladium gained $20 to $689/694.
“Gold prices are doing their best to hold above support but the market lacks energy and remains vulnerable; the same goes for silver. Platinum is attempting to edge higher while palladium has started to rebound from oversold conditions,” FastMarkets’ William Adams said.
The Greek debt saga is unfolding at a breakneck pace, adding volatility to currency and equity markets. The euro reversed earlier losses on reports that Greek Prime Minister Alexis Tsipras is ready to accept a fresh bailout with conditions from international creditors, which would render Sunday’s referendum on whether to accept the latest proposals moot.
As expected, Greece failed to repay 1.6 billion euros owed to the IMF last night, making national bankruptcy increasing likely. Tsipras suggested a last-minute deal that was rejected with German Chancellor Angela Merkel, who said there is nothing to discuss until after Sunday’s referendum.
The euro is now up marginally at 1.1149 against the dollar while European equity markets are in positive territory – the Dax is up 1.2 percent, the Cac-40 1.28 percent and the Euro Stoxx 1.25 percent.
But gold has confounded widely held assumptions that it would rise in a flight to safety – it has fallen more than one percent this week, nearly two percent in June and significantly from its May peak of $1,232.50 per ounce.
“Because the Greek debt is actually in the hands of sovereign powers, unlike at the time of the beginning of the crisis when it was in the hands of investors, the sting of a possible failure will not be directly felt by private investors (hedge funds, banks, brokerage houses),” Heraeus Miguel Perez-Santalla said on Tuesday.
“This means that the threat is not being taken as seriously as at the time of inception over five years ago. Hence the lack of interest in the hard assets since no one is concerned that their money will go up in smoke,” he added.
The market may be looking ahead to tomorrow’s US monthly jobs report, released one day earlier than usual because of the US national holiday on Friday. The current market consensus is that the US created 231,000 new jobs in June, down from 280,000 in May
In data today, China’s HSBC final manufacturing PMI for June at 49.4 was below expectations of 49.6 but above the 49.2 recorded in May. The official manufacturing PMI stood at 50.2 in June, unchanged from the previous month, while the non-manufacturing index rose to 53.8 from 53.2.
In Europe, the Spanish manufacturing PMI at 54.5 was below expectations of 55.6 as was the Italian number at 54.1. The German final manufacturing PMI was as expected at 51.9 as was the aggregated figure for the bloc at 52.5.
Challenger job cuts, the final manufacturing PMI, the ISM manufacturing PMI, construction spending, total vehicle sales and ISM manufacturing prices are due form the US later.
