Gold steady ahead of yet another Greek meeting

Otmane El Rhazi from The Bullion Desk.

The gold market was quiet on Friday with Asian participants sidelined; however, a single new headline out of Greece could easily snap the market in either direction.

Gold for April delivery on the Comex division of the New York Mercantile Exchange was last up $3.10 at $1,210.70 per ounce. Trade has ranged from $1,201.20 to $1,213.20.

“The Chinese are out of the market at the moment and shall remain out of the market until early next week due of course to the long celebration of the Lunar New Year. Thus, the Indians are left to protect the downside and thus far this year they’ve been reticent to do so aggressively,” Dennis Gartman, editor of the Gartman Letter, said.

A lot hinges on the return of China next Wednesday, agreed MKS Finance, noting that many participants are expecting them to be on the bid following the holiday.

“If this fails to be the case, the complex would likely continue its slide lower,” MKS said.

In technicals, gold’s initial break over the 100-day moving average of $1,217 yesterday was reversed later in the session after the euro fell, HSBC James Steel said.

“Bullion’s inability to hold over the 100-DMA left prices trading slightly lower they but remained firm over $1,200. We believe gold may test the psychological $1,200 level and may pose as a target for short-term traders,” Steel said.

In news, Germany on Thursday 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. Today, Greece will hold another important meeting with its creditors.

“We’ve no idea how this shall end although we still believe that at the 11th hour, 59th minute, some resolution shall be adopted that shall keep Greece in the euro for it is to no one’s advantage for Greece to be forced out. But at the moment, as we write in the wee hours of the early morning here in the States, things look bleak,” Gartman said.

Data out of the eurozone this morning was mixed – 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 – 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.

In the wider-markets, the dollar was 0.4 percent stronger at 1.1323 against the euro, while Germany’s DAX was up 0.26 percent and 0.31 percent respectively.

As for the other precious metals, Comex silver for March delivery were up 5.4 cents to $16.435 per ounce. Trade has ranged from $16.280 yo $16.495.

Platinum futures for April delivery on the Nymex was down $7.60 at $1,164.70 per ounce, while the most-actively traded palladium contract was at $782.00 per ounce, down $4.80.

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