Gold price slips on new Greek hope

Otmane El Rhazi from The Bullion Desk.

The gold market was quiet on Monday as the Chinese remain sidelined and relief emanates from Europe following a last minute deal to extend Greece’s bailout.

Gold for April delivery on the Comex division of the New York Mercantile Exchange was last down $4.40 at $1,200.50 per ounce. Trade has ranged from $1,190.60 to $1,204.70.

“The Chinese return from their New Year’s holiday later this week and with levels around the $1,200 area, we may well see some physical demand,” Marex Spectron’s David Govett said. “However the market seems quite happy to sell any rallies and I don’t see prices moving up substantially for a while to come.”

Greece has reached a deal in principle with its creditors to extend the country’s 240-billion-euro bailout although it must present a list of reforms to its lenders to secure the four-month extension, making a messy departure from the eurozone – the so-called ‘Grexit’ – less likely.

“Difficult as it is to predict at this point, we suspect that the Greek proposals will ultimately get a European sign-off on Monday, in which case we could see further price erosion in gold later in the week,” INTL FCStone’s Edward Meir said.

In gold specific data, the long liquidation in bullion futures continued for a third straight week. Comex gold net longs were down by 2.99 million ounces in the week ending February 17, according to CFTC data.

“The reality is that despite the speculative clean out over the last couple of weeks, gold net positioning is still around 22 percent above the 12- month average,” UBS analyst Edel Tully said

“Given recent encouraging developments in Europe, there could still be some room for further downside for gold. Specifically, the bigger risk for gold right now is the fact that gross shorts remain relatively lean: the reduction of immediate eurozone risks is likely to encourage shorts – who have been hesitant – to rebuild positions here,” Tully added.

It’s a light day for data, the German IFO business climate at 106.8 fell short of consensus at 107.4. US existing home sales are due later. The pace will pick up during the week, where attention will turn to numbers from China.

In the wider-markets, the dollar was 0.54 percent stronger at 1.1322 against the dollar, while Germany’s DAX and France’s CAC-40 were up 0.45 percent and 0.28 percent respectively.

As for the other precious metals, Comex silver for the March delivery were up 11.2 cents at $16.385 per ounce. Trade has ranged from $16.065 to $16.475.

Platinum for April delivery on the Nymex were up $3.10 at $1,166.40 per ounce, while the most-actively traded palladium contract was at $782.85 per ounce, up $3.65.

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