The gold price is looking for new direction after the Greek election moved to the background.
Gold for April delivery on the Comex division of the New York Mercantile Exchange was last up $1.50 at $1,281.90 per ounce. Trade has ranged from $1,273.00 to $1,285.00.
“Overnight we have seen some selling out of Asia, again stale longs liquidating, but the price has since recovered and the metals are now either side of unchanged,” Marex Spectron’s David Govett said.
Markets are still coming to terms with the implications of Greece’s general election – there the Syriza party has formed an anti-austerity coalition government with the right-wing Greek Independents party.
Syriza leader Alexis Tsipras has said he will renegotiate Greece’s 240-billion-euro bailout – this could lead to the country defaulting on its debt and, ultimately, exiting the eurozone.
“We have been relatively upbeat on gold over the short-term given the uncertainty regarding the size and scope of the European QE programme; uncertainty with regard to the outcome of the just-completed Greek elections and the collapse in oil prices with its potential to unleash unforeseen consequences on energy debt,” INTL FCStone’s Ed Meir said.
“All four of these scenarios seem to be receding in intensity somewhat and could arguably remove the tailwind that had been propelling gold prices up until this time. However, we think it is too early to adopt a bearish position just yet,” Meir added.
There is also a steady flow of economic data today. Already, China’s leading indicators rose 1.1 percent after a previous reading of 0.8 percent.
But US data has disappointed – durable goods orders at -3.4 percent undershot the expected 0.6 percent and core durable goods orders at -0.8 percent missed the forecast 0.6 percent. The US house prices index, the flash services PMI, consumer confidence, new home sales and the Richmond manufacturing index are due later.
Market attention will now turn to the US Federal Open Market Committee meeting, where the Fed is expected to take account of the uncertain global outlook and maintain its commitment to be patient on tightening. But its plan remains to increase interest rates perhaps by the middle of the year, which is dollar-positive.
“The FOMC’s upcoming deliberations over the timing of policy normalization will take place against a backdrop of falling inflation. Without a strong set of conditions that convincingly point to higher inflation in the near term, the committee is likely to pursue a cautious path and keep policy rates unchanged,” HSBC’s James Steel said.
“While the Fed is not expected to change much in terms of its policy statement, the bullion market is historically volatile leading up to monetary policy meetings,” Steel added.
In wider markets, the euro was up 0.5 percent at 1.1295 against the dollar and moving away from Monday’s 11-year lows, while Germany’s DAX and France’s CAC-40 were down 1.2 percent and 1.28 percent respectively. In Asia, the Nikkei closed 1.72 percent higher and the Hang Seng ended down 0.41 percent.
As for the other precious metals, Comex silver for March delivery was down 9.3 cents at $17.890 per ounce. Trade has ranged from $17.405 to $18.060.
Platinum futures for April delivery on the Nymex were up $4.50 at $1,259.50 per ounce, while the most active palladium contract was at $781.25, down 60 cents.
(Editing by Mark Shaw)
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