The gold price was effectively unchanged in Tuesday morning trading while global equity markets flourished and headwinds out of Greece kept traders wary.
Spot gold was last at $1,195.50/1,196.30 per ounce, unchanged from Monday’s close and in the middle of a narrow $4 intraday range. Other metals were slightly stronger, with silver up nine cents at $16.01/16.06, platinum $4.50 higher at $1,148/1,153 and palladium up $5 at $773/779.
Equity markets are in positive territory, in contrast to the precious metals. Yesterday the S&P 500 closed up 0.92 percent and the Dow 1.17 percent while in Asia this morning the Nikkei closed up 1.4 percent and the Hang Seng 2.79 percent.
European indices are all higher, with the DAX up 1.5 percent and the STOXX by 0.94 percent.
“The dollar and stock market strength remain the main drivers in the precious metals markets, with traders reasoning, quite rightly, that gold is providing no hedge against geopolitical risk and returning zero value on investment this year,” Marex Spectron’s David Govett said.
Although precious metals are rangebound for now, the dollar – last up around half a cent at 1.0670 against the euro – could pressure them lower before long, he warned.
While the prospect of Greece’s exit from the eurozone – the so-called ‘Grexit’ – should bolster gold’s credentials as a safe-haven investment, the stronger dollar is capping gains.
With Greece still yet to submit a list of reforms to its creditors and in increasing danger of running out of money to service its debts, the prospect of a Grexit continues to overshadow the markets.
Still, contagion risk has been dampened somewhat by comments from ECB vice president Vitor Constancio, who suggested that Greece might not be forced to leave the eurozone just because its defaults on its debt.
Gold is set to hold in its broad prevailing $1,185-1,225 range until next week’s FOMC meeting, MKS’ Alex Thorndike said in a note.
“We are looking out for a close below the recent $1,190-93 area which could draw out more technical selling and force a retest of the $1,180-84 support zone,” he added.
India today celebrates the festival of Akshaya Tritiya, one of the most auspicious days in the calendar to buy gold. Huge import figures in March and talk of similar numbers in April have yet to be digested by the market, although the influx of metal may well put some pressure on local premiums.
In data, German ZEW economic sentiment at 53.3 undershot the expected 55.6 but the figure for the eurozone as a whole at 64.8 was better than the forecast 63.7.
(Editing by Mark Shaw)
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