WSJ: Greece Drama Fails to Spur Gold, Silver Prices
LONDON--Gold and silver prices were steady on Monday, as investors appeared to be more concerned about a possible interest rate hike in the U.S. than any of the fallout from the Greek ‘No’ vote.
“In our view, the dominant issue for the gold price this year has been the prospect of a U.S. Federal Reserve rate hike,” said analysts at Barclays. “From this perspective, the gold price has been trading as a proxy for the market’s views regarding the timing and likelihood of a rate hike.”
Whenever there are dovish signals from the Fed or weak U.S. economic data, the gold price rises; but when there are hawkish statements or strong U.S. data, prices fall, they said.
Spot gold was flat at $1,163.50 a troy ounce in morning European trading.
Meanwhile, the situation of Greek banks may come into focus for gold investors. The “unexpectedly resolute ‘No’ vote” in Sunday’s referendum in Greece may have increased the chances that the Mediterranean nation will leave the eurozone, “yet there has been virtually no reaction from the gold price,” said analysts at Commerzbank.
“The majority of market participants clearly still expect an agreement to be reached with Greece, allowing the country to remain in the eurozone,” they said. The focus now is on the emergency loans for Greek banks: unless lending is topped up by the ECB, banks may run out of money, “which would mean a new level of escalation in the debt drama and should lend support to the gold price,” according to Barclays.
Elsewhere, the dollar was stronger against a basket of currencies, including the euro, sterling and the yen. Gold is priced in dollars, so it becomes cheaper to buy for those holding other currencies when the greenback softens.
