Gold closes at 3-week lows as Greek tragedy persists

Otmane El Rhazi from The Bullion Desk.

Gold prices were little changed during a listless trading period as investors await further clarification from ongoing Greek negotiations.

Gold for August delivery on the Comex division of the New York Mercantile Exchange rose $1.40 to close at $1,173.20 per ounce, the lowest price since June 5. Trade has ranged from $1,167.10 to $1,178.00.

Gold finished lower four of five sessions this week as a host of data releases painted a murky picture of exactly how the US economy is doing.

Meanwhile in Greece, eurozone finance ministers concluded another round of talks yesterday – attempts to broker a deal between Greece and its creditors have remained fruitless. Fresh talks are tabled for Saturday, with a 1.6-billion-euro repayment due to the International Monetary Fund by the end of the month hanging over proceedings.

Should Greece not have some kind of deal in place by Sunday night, Greek banks will remain closed on Monday and capital controls will be introduced, JP Morgan suggested. The chances of the country averting a default will start to look very slim.

“It’s good to take a step back and put the Greece tit-for-tat aside as the creditors and officials plan on playing another (final) innings tomorrow morning at yet another eurogroup meeting,” Societe Generale said. “No breakthrough probably means capital controls after we return from the weekend when banks in Athens open on Monday morning.”

However, gold’s outlook in both the short and long term remains bearish even should there be a resolution to the long-running Greek debt saga.

“Although we acknowledge a small pick-up in investor interest toward gold because of heightened uncertainty over Greece, we believe that the short-term risks are skewed to the downside because either a Greek default would force investors to liquidate riskier assets, including gold, or a deal would reduce safe-have buying,” FastMarkets analyst Boris Mikanikrezai said.

Switching to equities, the Dow Jones industrial average was up 0.2 percent and S&P was down 0.2 percent, while the dollar was 0.5 percent stronger at $1.1156 against the euro.

In US data, University of Michigan Consumer sentiment was 96.1, besting forecasts of 94.6, while inflation was rose 2.7 percent.

In Europe, German import prices fell short at -0.2 percent, as did M3 money supply at 5.0 percent.

As for the other precious metals, Comex silver for July delivery was down 5.8 cents at $15.750 per ounce. Trade has ranged from $15.450 to $15.865.

Platinum futures for July delivery on the Nymex fell $1.90 at $1,082.50 per ounce, while the most-actively traded palladium contract was at $679.90, up 55 cents.

(Editing by Tom Jennemann)

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