Gold futures were near unchanged on Wednesday as the post holiday sell-off failed to inflict too much technical damage.
Gold for June delivery on the Comex division of the New York Mercantile Exchange was last down $1.50 at $1,185.40 per ounce. Trade has ranged from $1,183.50 to $1,190.40.
“Gold had been hovering just above $1,200 for a while, with the market still long from the previous week’s rally and once the magical number broke, in came the selling,” Marex Spectron’s David Govett, said.
“Dollar strength was the main contributor as per usual, but the range remains intact and I reiterate for the umpteenth time that we are stuck between broadly $1,175 and $1,225 and we continue to trade that range. Again as I have said before, when it looks good sell it, when it looks bad buy it,” he added.
Despite Tuesday’s sharp sell-off, gold still seems to be in a trading range and has not deteriorated much, technically speaking, INTL FCStone’s Edward Meir agreed.
“We suspect that the next flash point could come on Friday when first quarter US GDP readings are possibly revised to show negative growth,” Meir added. “This is, in turn, should jolt the markets into realizing just how much more the US economy needs to improve in order to get anywhere close to Janet Yellen’s optimistic growth projections and possibly weaken the dollar in the process.”
In news, Greek officials and its creditors will again attempt to negotiate a bailout deal today; a lack of progress in recent talks pushed European equities lower yesterday, with the FTSE 100 falling 80 points. The Dow Jones also closed lower, falling more than 190 points.
Greece must repay four loans to the International Monetary Fund in June totalling 1.6 billion euros; Athens has so far indicated that it may not be able to make these payments without a deal in place.
“In the end Greece and the Brussels Group will find a way at the 11th hour, 50 minute to accommodate the debt repayment problems that are so much at the centre stage these days,” Dennis Gartman, editor of the Gartman Letter, said.
“As we have said, the problem is not between Greece and Germany, as many would have us believe, but is instead between Greece and the other so-called PIIGS nations: Portugal; Italy; Ireland and Spain, for the latter countries have all gone through the process of austerity and economic reform and are, as they say, ‘coming out of the other side’ in much better shape economically and politically,” Gartman added.
Still, confidence in the European economy remains high – the GfK German consumer climate at 10.2 was better than expected, up from 10.1 previously and the highest reading since October 2011.
In the wider-markets this morning, the euro was slightly weaker at 1.0866 against the dollar, while Germany’s DAX and France’s CAC-40 were up 0.17 percent and 0.53 percent respectively.
As for the other precious metals, Comex silver for July delivery was last down 10.6 cents at $16.640 per ounce. Trade has ranged from $16.630 to $16.810.
Platinum futures for July delivery on the Nymex were down 40 cents at $1,123.70 per ounce, while the most-actively traded palladium contract was at $781.10 per ounce, up 70 cents.
(Additional reporting by Ian Walker)
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