The gold price rallied on Monday as political uncertainty in Greece and an another tumble in oil had investors shifting assets into traditional safe-havens.
Gold for February delivery on the Comex division of the New York Mercantile Exchange was last up $10.20 at $1,196.40 per ounce. Trade has ranged from $1,177.80 to $1,199.60.
“Greece is back on the front page of the newspapers – time to buy gold,” said a US-based metals trader, who noted that the yellow-metal climbed over $1,900 per ounce during the height of the eurozone credit crisis in 2011.
“They’ve mostly fenced [Greece] off, so [that country] won’t be able to drag down the entire global economy this time around. But the combination of a Greek election and [European Central Bank] stimulus will support [gold prices] in the near-term,” he added.
In currencies, the euro fell to 1.1861 against the dollar, a nine-year low, while the dollar index is at a nine-year high on growing speculation that the European Central Bank will begin quantitative easing (QE) measures and fears that the snap election in Greece on January 25 could set the stage for the country’s eventual exit from the common currency.
“Simply put, there are ample fundamental reasons for the dollar’s strength and for the euro’s weakness,” Dennis Gartman, editor of the Gartman Letter, said.
“Further, we see nothing on the horizon that shall work against those trends, for the European economy is demonstrably weaker than is that of the US economy; the political situation here is calmer than is that of Europe and the monetary authorities in the States are not likely to move to become easier,” Gartman added.
In the wider-markets, Germany’s DAX and France’s CAC-40 were down 1.17 percent and 1.37 percent respectively, while light sweet crude (WTI) oil futures were off $2.00, or 3.8 percent, at $50.69 per barrel.
In gold specific data, China imported a net 99.1 tonnes of gold from Hong Kong in November, according to the Census and Statistics Department of the Hong Kong government, the highest figure since February. This is up from 77.6 tonnes in October and the fourth consecutive monthly increase.
“Clearly, consumers are taking advantage of the low prices to buy up more gold,” Commerzbank said in a note on Monday. “Retailers have no doubt also been replenishing their stocks ahead of the New Year festival in mid-February.”
In data today, the Spanish unemployment change at -64,400 missed the forecast -72,000, while the Sentix investor confidence in the eurozone at 0.9 was better than expected.
The German preliminary CPI and US vehicle sales data are due later but the pace picks up later this week, culminating in Friday’s blockbuster US non-farm payrolls.
As for the other precious metals, Comex silver for March delivery was up 23.2 cents at $16.00 per ounce. Trade has ranged from $15.630 to $16.095.
Platinum futures for April delivery on the Nymex were up $1.60 at $1,202.30 per ounce, while the most-actively traded palladium contract was at $795.25 per ounce, up 40 cents.
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