Gold traders have shown remarkable disinterest in the events in Greece over the weekend. Gold is trading down just 10 cents in the morning session falling to 1167.70. Silver dipped 77 points to trade at 15.578 while platinum tumbled $6.35 to reach 1077.70 as the spread between gold and platinum widened to $90.00. Gold prices steadied on Friday as the U.S. dollar softened, while investors remained cautious ahead of Greece’s referendum on an international bailout deal. Gold has been under pressure this year from uncertainty over the timing of any rate increase, which could boost the dollar further and dent demand for non-interest-paying bullion.
Worries about the Greek sovereign default are, surprisingly enough, not adding much sheen to gold. The yellow metal has failed to display any safe-haven attributes in this entire Greece drama. Instead it has been completely driven and influenced by movements in the US dollar. This is a repeat of the situation during strikes on Syria and the Russia-Ukraine crisis last year. Although financial markets are nervous, investors seem to be shunning gold as a safe haven and rushing into the dollar instead.
The US trade balance data on Tuesday could influence the dollar movement which in turn could impact gold. The US Federal Reserve is largely concerned about the slowdown in exports (down about 4 per cent from $134.5 billion in December last year to $129 billion in April). If the exports data is positive, the dollar could get a further boost this week. As a result, gold could come under pressure and fall further.
Bloomberg reported “Greeks voted in a weekend referendum to reject further austerity measures required to win another bailout, spurring speculation the country will be forced to quit the euro zone. While the U.S. currency strengthened after the result, bullion failed to hold onto gains. There would be only limited upside for gold in the case of a ‘no’ vote as the dollar would likely be supported, ABN Amro Bank NV said last week, forecasting further losses as the Federal Reserve moves to raise rates.
“The strength of the dollar as a haven continues, and investors may look beyond Greece to Fed rate action,” George Gero, vice president of global futures at RBC Capital Markets in New York said in an e-mail. “This may be a headwind for gold.”
