BD: Gold slumps to March lows, Greek talks boost dollar
Gold prices slumped to their lowest since March as back-and-forth developments over Greece’s debt talks are providing an incentive for investors to disassociate with the eurozone and its currency.
Gold for August delivery on the Comex division of the New York Mercantile Exchange fell $6.50 or 0.6 percent to $1,162.80 per ounce. Earlier, the price touched $1,158.20, the lowest since March 18.
Greek Prime Minister Alexis Tsipras’ aggressive decision to exit negotiations and announce a referendum for Sunday seems to be backfiring. German Chancellor Angela Merkel has reportedly put off a decision until the referendum is voted on by the Greek citizens.
A yes vote would display a total lack of confidence in Tsipras and his left wing-coalition party, Syriza, likely resulting in a reelection. A rejection of the creditor’s proposal would continue the months-long impasse and could signal the end for Greece in the bloc.
The tit-for-tat fails to answer why gold remains in a suppressed state, as the yellow metal is historically viewed as a safe haven for investors during periods of uncertainty, analysts said.
“Gold prices remain weak despite heightened uncertainty stemming from the Greek crisis,” Boris Mikanikrezai, a researcher at FastMarkets, said. “The dollar has continued to push higher of late, reflecting better-than-expected US economic data and heightened uncertainty stemming from the Greek crisis.”
In wider markets, Germany’s DAX and France’s CAC-40 both oscillated around a null percent change. The euro was 0.5 percent stronger at $1.1106 against the dollar, but has declined steadily since Monday afternoon.
In the June US non-farm payrolls report, data showed 223,000 jobs were created, below the 231,000 forecast as the unemployment rate fell to 5.3 percent, a slight improvement from consensus of 5.4 percent.
Average hourly earnings month-over-month in June were unchanged, with consensus pegging a 0.2 percent increase, while new unemployment claims came in at 281,000, worse than predictions of 270,000.
Meanwhile in the eurozone, PPI month-over-month in May was unchanged, with a 0.1 percent increase forecast.
As for other precious metals, Comex silver for September delivery was last down 1.2 cents to $15.565 per ounce. Trade has ranged from $15.450 to $15.605.
Platinum for October delivery declined $6.30 to $1,081.50 per ounce, while the most actively traded palladium contract was at $698.90, down $2.30.
