Gold price edges higher on hopes of Greek debt deal

Otmane El Rhazi from The Bullion Desk.

Gold eked out a gain on Tuesday afternoon on a resurgent euro prompted by suggestions that Greece may be nearing a deal with its creditors.

The spot gold price of $1,191.30/1,192.10 per ounce was up $3.10 on Monday’s close, having traded as high as $1,196.40 earlier.

The reversal from intraday lows of $1,182.90 follows reports that Greece’s creditors are close to finalising a draft agreement giving Athens access to the funds it desperately needs to service its debts and avoid an exit from the eurozone. This pushed the dollar to lows of 1.1191 against the euro at one stage.

The heads of the International Monetary Fund, European Central Bank, German Chancellor Angela Merkel, French President Francois Hollande and European Commission head Jean-Claude Juncker met late on Monday night to discuss a “final proposal” ahead of Greece’s Friday deadline for a 300-million-euro payment to the IMF.

Although the weaker dollar provided precious metals with the impetus to move higher, a Greek debt deal would diminish part of gold’s safe-haven appeal.

In today’s data, the Spanish unemployment change at -118,000 was slightly better than expectations and while Germany’s jobless total only fell by 6,000 last month – below the expected drop of 10,000 – the national unemployment rate of 6.4 percent is a record low.

The EU CPI flash estimate and the core CPI flash estimate were both positive at 0.3 percent and 0.9 percent respectively – inflation returned to the bloc for the first time in six months, suggesting the ECB’s stimulus programme is starting to take effect, with the economy avoiding a slide into deflation that previous data had suggested.

But the eurozone PPI undershot at -0.1 percent. US factory orders at -0.4 percent, meanwhile, missed the forecast 0 percent.

In other metals, silver gained eight cents to $16.77/16.82 per ounce, platinum moved away from the $1,100 mark – it was last $9 higher at $1,107/1,112 – and palladium slipped $2 to $765/771.

 

(Editing by Mark Shaw)

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