Gold price inches higher, $1,200/oz still elusive

Otmane El Rhazi from The Bullion Desk.

The gold price inched higher during Wednesday’s early morning sessions, but the psychologically important $1,200 level proved to be elusive and the yellow metal continued to find resistance here.

Spot gold was last at $1,193.60/1,194.40 per ounce, a $1.1 increase on the previous day’s close as it found support from a softer dollar – the greenback was last at 1.1256 against the euro.

“The catalyst behind the dollar selloff originated in the resumption of turmoil in the european bond markets, where yields started to move higher once again,” INTL FCStone analyst Edward Meir said.

Meanwhile, elsewhere, a Greek default is becoming increasingly likely while the country continues to negotiate with its creditors, with no resolution on particular issues such as state pensions and collective bargaining rights on the horizon.

And although Athens has started to repay 750 million euros to the International Monetary Fund ahead of today’s deadline, easing fears of a default this month, Greek finance minister Yanis Varoufakis has warned that his country faces insolvency within weeks and Alexis Tsipras’ government said yesterday that it has just over 600 million euros in cash reserves

“The yellow metal has remained range-bound for the better part of a month now and it does not really seem that there is anything on the immediate horizon that can knock us out of this,” added MKS Capital. “Perhaps the dark horse is Greece and any potential default if terms cannot be reached between them and their creditors, which would be beneficial for gold.”

Chinese data disappointed overnight, with industrial production at 5.9 percent against a forecasted 6.1 percent. Fixed asset investment was lower at 12 percent, while retail sales undershot at 10 percent.  

In other data, French prelim GDP was better-than-expected at 0.6 percent, but Germany disappointed at 0.3 percent.  German final CPI at 0.4 percent was as expected and French CPI undershot at 0.1 percent.

Later, the EU will release its unemployment rate, flash GDP and industrial production numbers. The US has core retails sales, retail sales, import prices and business inventories of note.

In other metals, silver at $16.58/16.63 was up on the previous $15.50.  Platinum increased $2 to $1,132/1,136 and palladium at $785/790 was up $2.

(Additional reporting by Ian Walker)

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