Gold price falls as new eurozone fears play on sentiment

Otmane El Rhazi from The Bullion Desk.

The gold price was down on Monday afternoon London trading, as fears over a potential crisis in the Europe maintained strength in the dollar.

Spot gold was last seen at $1,179.70/1,180.50 per ounce, down $15.50 on Friday’s close.

The losses come as investors appear nervy on the outlook of the eurozone, after Greece failed to elect a new president, paving the way for a snap election that could see the far-leftist and anti-austerity Syriza party into power.

The euro was last seen just above two-year lows at 1.2178. The European Central Bank has already warned that a move towards anti-austerity against the EU and IMF would see sanctions introduced.

Investors fear that a coalition of Syriza and other communists may derail the international bailout programme and ultimately lead to a Greek exit from the bloc economy.

“New Democracy and its allies in coalition will fail to gain a majority and the far-left-of centre Syriza Party will likely become the largest minority party and will succeed in piecing together a new left-of- centre coalition including the Communists and other allies on the left,” Dennis Gartman, editor of the Gartman Letter, said.

“The latest several polls taken in the past few days have Syriza with the support of somewhere close to 28 percent of the nation’s voters, while New Democracy has the support of 25 percent. This is a bit narrower in Syriza’ s favour of two weeks ago but it is still an indication that the nation’s votes are tired of New Democracy’s programme that has included the strident austerity demands put upon Athens by the Troika,” he added.

Today is light on the data side, with no frontline figures due. But Tuesday and Wednesday keynote economic releases will be compressed ahead of the January 1 holiday.

Notable figures include China’s final HSBC flash PMI on Tuesday, with US Tuesday/Wednesday releases including consumer confidence, weekly jobless claims, the Chicago PMI and pending homes sales, among others.

In other metals, silver was last seen at $15.75/15.80, up six cents although a high of $16.26 was seen earlier in the session, as thin trading conditions exacerbate moves across the precious metals. Platinum meanwhile at $1,198/1,202 is up $13 and palladium at $810/815 is up $7.

(Editing by Jennemann)

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