Gold gained ground for the third consecutive session on Wednesday morning, with a softer dollar once again providing the impetus.
The spot gold price of $1,183.50/1,184.30 per ounce was up $7.20 on Tuesday’s close and close to intraday peaks – the metal has traded in an intraday range of $10 so far.
Similarly, silver was last up 20 cents at $16.12/16.17 per ounce, platinum gained $10 to $1,113/1,118 and palladium was $8 higher at $744/749.
“Gold is rebounding after Friday’s spike lower, platinum is following, silver has for now stopped falling but is not rising much and palladium remains under pressure but is oversold,” FastMarkets analyst William Adams said.
“Given the stalemate over Greece, the potential for other asset classes to correct and the weaker dollar, we are mildly bullish for gold and would be prepared to get even more bullish if it starts to gain momentum,” he added.
The dollar hit its weakest since May 18 earlier this morning at 1.1386 against the euro. 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.
Greek Prime Minister Alexis Tsipras is heading back to Brussels today for a meeting with the leaders of France and Germany in an attempt to unlock the crucial funds the country needs to service its debts.
The country’s latest proposal was reportedly criticised by EU officials for still failing to meet the creditors’ demands on VAT rates, pensions and budget targets.
“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,” Commerzbank said this morning.
The yen has also made significant gains this morning, rising nearly 1.5 percent after Bank of Japan governor Haruhiko Kuroda said that the currency is unlikely to weaken any further. The Japanese currency was last seen at 122.66 against the dollar, its best since May 26.
Elsewhere in Asia, China has doubled the quote for local governments to swap high-interest debts into lower-cost bonds to two trillion yuan.
In data today, French industrial production fell short of expectations at -0.9 percent, as did the Italian number at -0.3 percent. The US Federal budget balance is due this afternoon.
(Editing by Mark Shaw)
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