Gold futures made solid gains early on Tuesday morning in the US on technical buying, fresh Greek uncertainty and a weaker dollar.
Gold for August delivery on the Comex division of the New York Mercantile Exchange was last up $11.30 at $1,188.90 per ounce. Trade has ranged from $1,174.30 to $1,189.10.
“Gold in US dollar terms has seemed to have found support at the $1,170-$1,180 level and although time only shall tell if that support shall prove ephemeral or material, for now suffice it to be said that we are impressed,” Dennis Gartman, editor of the Gartman Letter, said.
In news, Beijing overnight doubled the quota allowing its provinces to swap debt for bonds to two trillion yuan, which provided support to the complex. Still, many market participants were expecting additional stimulus measures after a recent run of negative data.
Meanwhile, the dollar hit its weakest since May 18 earlier this morning at 1.1386 against the euro although European stock markets struck their lowest in around 16 weeks on Tuesday – they are on course for a seventh consecutive session of declines – while Greek bailout talks rumble on and government bond prices fall.
The yield, which moves in the opposite direction to the price, on 10-year German government bunds has risen above one percent for the first time since September 2014 after European Central Bank president Mario Draghi warned last week of volatility.
“Gold evidently found support from the Greek debt crisis, for a new list of proposed reforms submitted by the highly indebted country was rejected by EU representatives as being insufficient,” Commerzbank said, noting that it remains unclear whether Greece will be able to afford the bundled repayment of 1.6 billion euros to the International Monetary Fund at the end of the month.
“This will probably only be possible if aid payments are released. The uncertainty about what will happen next and whether Greece may ultimately have to leave the eurozone after all should contribute to solid demand for gold,” the broker added.
As for the other precious metals, Comex silver for July delivery was up 17.8 cents at $16.135 per ounce. Trade has ranged from $15.895 to $16.160. Platinum for July delivery on the Nymex was up $8.90 at $1,117.40 while the most actively traded palladium contract was at $747.40, up $7.50.
(Editing by Mark Shaw)
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