The gold price drifted further in early trading on Tuesday, failing to benefit from its supposed safe-haven qualities while Greece staggers towards an exit from the eurozone.
Spot gold was last at $1,176.90/1,177.60 per ounce, down $2.80 on Tuesday’s close and having traded in an intraday range of $7 so far.
Assuming an unlikely last-minute deal is not reached, Greece’s 7.2-billion-euro bailout programme with international creditors will end, leaving the country with huge debts and few allies.
The country appears to be set to miss the 1.6-billion-euro payment owed to the International Monetary Fund, putting it on track for a potentially messy ‘Grexit’.
The Greek people are set to go to the polls on Sunday to vote for or against the latest proposals from its creditors. Prime Minister Tsipras made a television appeal on Monday to urge Greeks to vote against the austerity measures that it has been campaigning against for the last five months.
But despite the uncertainty and heavy pressure on the world equity markets, gold is down more than one percent for the week, nearly two percent in June and down significantly from the May peak of $1,232.50.
“We remain surprised that gold is not being taken up as a safe haven but it does seem to still be supported in the $1,160-1,170 area,” FastMarkets analyst William Adams said.
The metal’s lack of volatility is a sign that the market expects Greece to stay in the bloc, Commerzbank suggested. But Marex Spectron’s David Govett disagreed.
“I have said it before and I have no doubt I will say it again, but attempting to link Greece to gold is a serious waste of time. Gold is not a safe haven and proved that once again yesterday,” he said.
“The Greeks can carry on attempting to self-destruct along with the help of the EU and the IMF, but at the end of the day, gold will not be the product to turn to in attempting to guard against European chaos,” he added.
The euro is weaker this morning at 1.1164 against the dollar, down around 0.5 percent, while European stock indices have also opened slightly lower. The Dax was last down around one percent, as was the Cac-40 while the Euro Stoxx was 0.83 percent lower. Earlier, Asian markets closed just in positive territory, having swung considerably over the past couple of sessions.
In data today, German retail sales bettered expectations at 0.5 percent, while French consumer spending dropped short at 0.1 percent. The Italian monthly unemployment rate was better than expected at 12.4 percent, while the German unemployment change at -1,000 undershot.
The aggregated eurozone CPI at 0.2 percent was as expected, as were the core figure at 0.8 percent and the unemployment rate at 11.1 percent.
The CB consumer confidence number, the Chicago PMI and the S&P/CS Composite-20 HPI are die from the US later.
In the other metals, silver was last down five cents at $15.68/15.73 per ounce, palladium was up $7 at $670/675 and platinum was unchanged at $1,179/1,084.
(Editing by Mark Shaw)
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