Gold prices retested the key psychological level of $1,200 early on Friday on renewed eurozone uncertainty into the weekend.
Spot gold was last at $1,204.20/1,205.00 per ounce, down $3.80 on Thursday’s close and just off an intraday low of $1,201.60. Silver was last two cents higher at $16.39/16.44 but platinum at $1,158/1,163 was down $9 at a fresh July 2009 low and palladium slipped $1 lower to $778/783.
“Gold finds itself under unexpected pressure in a market environment fraught with uncertainties and this morning dipped temporarily to $1,200,” Commerzbank said in a note.
“In euro terms, gold is trading at around 1,060 per troy ounce. This is because positive US economic data published yesterday increased the probability of the US Federal Reserve raising interest rates sooner rather than later,” it added.
US unemployment claims dropped 21,000 to a seasonally adjusted 283,000, which was better than the 293,000 forecast, indicating that labour market there continues to heal.
Mixed data out of the eurozone this morning pushed gold lower – the French and German manufacturing PMIs both fell short of forecasts at 47.7 and 50.9 respectively, with the overall bloc number also disappointing at 51.1.
The services PMIs were positive, though, and probably stemmed the euro’s losses – the French and German readings at 53.4 and 55.5 respectively were both better than expected, as was the overall eurozone number at 53.9. The US flash manufacturing PMI is due later.
The dollar moved up to intraday highs against the euro of 1.1304 before settling at 1.1320 ahead of the third showdown between eurozone and Greek finance ministers in Brussels today to thrash out a deal over Greece’s 240-billion-euro bailout.
“This seems to be split into three camps, Greece saying ‘enough is enough, we can’t pay’, European Commission president Jean-Claude Juncker trying to fudge a temporary euro fix and Germany saying ‘no more money from us’ and over the top of Juncker and the commission,” Malcolm Freeman of Kingdom Futures told FastMarkets.
“If a solution is not found it would be very bearish for the euro and thus the European economy,” he added.
On Thursday, Germany rejected Greece’s application to extend its loan agreement and renegotiate the terms of its bailout, which raised the odds that Athens could default in the coming weeks and potentially trigger a messy exit from the eurozone – the so-called Grexit.
A failure to reach an agreement may add some near-term safe-haven appeal to gold, with Greece’s current deal set to expire on February 28.
“Sitting over all of this is the Ukrainian situation and what appears to be Russia’s intention to test European resolve to all her expansionist intentions. Given the European Union’s inability to solve the Greek issue or indeed any issue, Russia is unlikely to be worried by anything the EU does or says,” Freeman added.
(Editing by Mark Shaw)
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