Gold eked out some gains in early-morning London trading but was largely rangebound while rumours circulate that the EU Commission will offer Greece a bridging deal.
The spot gold price at $1,237.10/1,2337.90 per ounce was up $4.30 on Tuesday’s close but has been confined to a tight intraday range of $6 so far. Silver followed gold higher, rising 17 cents at $17.02/17.07.
“The precious metals are on a back footing, which is surprising given the geopolitical situation. But judging by the CFTC data the longs are already extended and the short positions are relatively small so there might not be that much buying pressure around, with physical buyers now probably waiting to see where prices base out,” FastMarkets analyst William Adams said.
Three main factors driving gold are whether Greece can reach a deal with creditors over its bailout, the situation in Ukraine and the timing of the US Fed rate rise.
The European Council and Eurogroup ministers are likely to discuss at today’s meeting concessions demanded by new Greek Prime Minister Alexis Tsipras on its austerity programme.
The county’s 240-billion-euro bailout is due to expire on February 28, potentially leaving the country bankrupt and at risk of a eurozone exit unless it can reach a deal with creditors. Gold slipped earlier on speculation the EU Commission would table a six-month bridging deal that would allow the country more time to arrange a more long-term solution.
“We are expecting gold to continue to trade within the aforementioned range, however developments out of the Eurozone finance ministers meeting in Brussels today may see a break with risk to the top-side if the parties cannot find common ground,” MKS said in a note.
As well, political leaders are also due to meet in Minsk today with Ukrainian President Petro Poreshenko and Russian President Vladimir Putin to revive a collapsed ceasefire agreement signed back in September.
A revival of the peace plan and subsequent de-escalation of geopolitical tensions are likely to place downside pressure on gold in the near-term.
“If there are positive developments over Greece, or Ukraine then there could be further shake-outs. Conversely, if the geopolitical situations deteriorate, the pullbacks have made room for rebounds. For now, we expect more sabre-rattling over Greece, Ukraine and the timing of the US Fed rate hike, all of which is expected to keep the markets choppy,” FastMarkets’ Adams added.
There is no real data of significance due today, with only US crude oil inventories and the federal budget balance due.
“I would look for continued range trading in the absence of any fresh news,” Marex Spectron’s David Govett said.
The PGMs have so far been largely rangebound – platinum was last up $5 at $1,206/1,211 per ounce while palladium edged $1 higher to $766/772.
(Editing by Mark Shaw)
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