Gold dips on Greek debt progress, soft physical demand

Otmane El Rhazi from The Bullion Desk.

Gold fell sharply on Monday as prospects of a short-term Greek debt fix removed some safe-haven support.

Gold for August delivery on the Comex division of the New York Mercantile Exchange was last down $17.20, or 1.5 percent, at $1,184.70 per ounce. Trade ranged from $1,181.60 to $1,200.80.

“No deal yet, but prospects are a little brighter, which took the edge off gold, but the situation remains fluid,” Peter Hug, global trading director at Kitco Metals, said.

“The lack of physical demand and general fundamentals are continuing to prove a negative headwind for gold, but traders are wary of being short into the final hours of this Greek negotiation,” he added.

In the seemingly never-ending Greek drama, Athens must pay 1.6 billion euros to the International Monetary Fund (IMF) by June 30; failure to make that payment before the deadline could send Greece towards an exit from the bloc – the so-called Grexit.

Still, Prime Minister Alexis Tsipras put forward a new list of reforms last night to appease creditors that have been well received – Eurogroup president Jeroen Dijsselbloem called them “a step in the right direction” ahead of an emergency summit of EU leaders this evening and another Eurogroup meeting on Thursday at which a deal might be struck.

Reportedly, Tsipras’ proposals may include major concessions on pensions – one of the key areas where Athens had been reluctant to implement reform given the Syriza Party’s anti-austerity platform.

But even if Greece makes its repayment to the IMF this month, it still owes the fund around 320 billion euros and owes billions to the ECB and the EU. It also has government bonds and T-bills to cover.

In the wider-markets, the euro was little-changed around 1.1342 against the dollar – today is light for economic releases, with EU consumer confidence as expected at -6 and US existing home sales positive at 5.35 million.

But European equities rallies – Germany’s DAX and France’s CAC-40 each rose by 3.81 percent, while here in the US the Dow Jones industrial average and S&P 500 were up 0.56 percent and 0.59 percent.

As for the other precious metals, Comex silver for July delivery was last up 3.6 cents at $16.145 per ounce. Trade ranged from $15.985 to $16.230.

Platinum futures for July delivery on the Nymex were down $24.70 at $1,062.10 per ounce, while the most-actively traded palladium contract was at $696.00 per ounce, down $11.40.

(Additional reporting by Martin Hayes)

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