Gold price confined to tight range, market lacking volatility

Otmane El Rhazi from The Bullion Desk.

The gold price was quiet on Tuesday morning London trading, with a weaker dollar providing the impetus for modest gains.

Spot gold was last seen at $1,184.50/1,185.30 per ounce, up $1.90 on the previous session and trading within an intraday range of $5 thus far.

“The precious metals continue to consolidate in mid-to-low-ground as investor interest still seems to be focused on other asset classes – it may take deeper corrections in other markets, or a crisis over Greece, before investors need a safe-haven again,” FastMarkets analyst William Adams said.

The lack of volatility comes amid crosswinds coming out of the Eurozone with regard to the Greek debt crisis, though the market is still lacking any real catalysts to define its near-term direction.

Gold dropped late on Monday on news that Greece ordered the payment of 750 million euros to the IMF, downplaying fears of the severity of the cash-crisis in the country.

The move has also been perceived as a sign that Greece may come to an agreement with Eurozone ministers soon, although so far the three-months of talks have yet to bear fruit.

“The relaxation of Greek financial concerns may have eased demand for bullion as a perceived ‘safe-haven’ asset. Gold is likely to remain weak in the near term,” HSBC’s James Steel said.

Though, a senior IMF official was reported by some media outlets as saying that the body is working with some of Greece’s neighbours on contingency plans for a Greek default.

Nonetheless, the euro is up this morning nearly one cent against the dollar at 1.1231, which is allowing modest gains in gold – though some market participants are wary following comments from the San Francisco Federal Reserve President John Williams with regard to US monetary policy.

Williams said that the US central bank is unlikely to provide any warning ahead of an increase to interest rates, claiming that the Fed needs to “get out of this business of telegraphing decisions in advance”

On the data front on Tuesday, there are few figures of note out of the Eurozone with just the JOLTS job openings and federal budget balance due for release out of the US this afternoon.

Other metals performed similarly, silver was up three cents at $16.27/16.32 per ounce while platinum was up $7 at $1,127/1,131 and palladium up $8 at $785/790.

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