BD: Gold price unmoved as Greek people vote against bailout terms
The gold price was almost unmoved on Monday, shrugging off news that Greece has taken one step closer to an exit from the bloc by voting against proposals for another bailout agreement.
Spot gold was last down $1.10 at $1,166.80/1,167.60 per ounce, having hit heights of $1,174.60 during Asian hours. Greek voters have gambled the future of the country’s membership of the Eurozone, voting overwhelmingly against the terms of an international bailout on Sunday.
The final result was 61.3 percent against the proposals and 38.7 percent for. The euro is down 0.5 percent at 1.1051 against the dollar, having hit a session low of 1.0981 earlier – all major European indices are also struggling. The Dax was last down 2.1 percent and the Cac-40 by 2.06 percent.
During a televised address on Sunday, Greek prime minister Alexis Tsipras said that the country would go back to the negotiating table “as of tomorrow” and that his party’s primary priority was to reinstate the financial stability of the country.”
As yet, gold is following a similar story to last week’s action – failing to make anything of its supposed safe-haven qualities. Instead, investors have turned to German debt as an alternative safe-haven – the yield on the 10 year Bund is now down eight percent at 0.7310.
JP Morgan however has said that ultimately, gold could test $1,300 per ounce as a result, or even $1,400 if attempts at containing the contagion fall short and shockwaves disrupt broader Europe. “The Greek government would most likely call another referendum on Greek membership in the EMU. Under such a scenario, it is possible (but not assured since visibility is so low) that Greece leaves the euro currency union,” the bank said.
“Under such scenario, we believe gold prices will likely receive short-term upwards momentum, possibly trading up to $1,300 per ounce. But as the ECB intervenes and the crisis does not lead to a chain of cross-border defaults, the attention of investors will soon switch again to the timing and pace of Fed rate hikes,” it added.
Elsewhere, in China, authorities and industry bodies announced a wave of new measures to attempt to halt the collapse of the Chinese stock markets.
These measures, among many, include the suspension of upcoming IPOs in a bid to head off diversion of funds into new listing. 21 separate stockbrokers have pledged to invest nearly $20 billion in blue-chip ETFs and to retain their holdings when the Shanghai Composite Index falls below 4500 and the capital base of the regulator’s unit that provides margin lending to brokerages has been boosted to $16.1 billion.
“These latest measures highlight the authorities’ urgency at preventing a deeper rout that could dampen domestic demand and further exacerbate the slowing Chinese economy,” MKS said in a note.
In Asian markets, while the Nikkei was down 2.08 percent and Hang Seng by 3.41 percent, the Shanghai Composite was up 2.28 percent.
In data today, German factory orders came in at -0.2 percent. Still to come will be the retail PMI for the eurozone and the ISM non-manufacturing PMI out of the US.
In other metals, silver was last down six cents at $15.59/15.64 per ounce, palladium was down $7 at $673/678 and platinum was down $11 at $1,066/1,071.
