Gold price nudges higher after Grexit fears hit European equities

Otmane El Rhazi from The Bullion Desk.

The gold price remained flat on Friday morning while the markets remained fixed on developments in the Greek debt saga.

Spot gold was last up $1.80 on Thursday’s close at $1,175.00/1,175.80 per ounce, having traded in a $7 intraday range so far.

European equity markets opened lower this morning, reflecting the prospect of Greece failing to reach a last-minute deal with creditors.

Eurozone finance ministers met yesterday in another attempt resolve the deadlock between Athens and its creditors but failed to thrash out a deal. European politicians will now be preparing for talks to resume on Saturday; should Greece not have some kind of deal in place by Sunday, the chances of the country averting a default will start to look exceedingly slim.

“The Greece debacle and the apparent lack of interest in gold speak volumes about sentiment. If an eleventh-hour deal is agreed, gold may well sell off – still, there has not be much on the upside for gold from Greece so perhaps there will not be much of a negative reaction,” FastMarkets analyst William Adams said.

Should a deal not be reached by Sunday night, Greek banks will remain closed on Monday and capital controls will be introduced, JP Morgan suggested.

European bourses are just in negative territory, having performed well earlier in the week when positivity about a likely deal spread to investors.

Today the Euro Stoxx is down 0.76 percent, the Dax 0.5 percent and the Cac 40 0.74 percent. Still, the euro is holding steady at 1.1210 against the euro. Earlier in Asia, the Hang Seng and Nikkei both ended in negative territory and the Shanghai Composite closed down 7.87 percent – around the largest daily decline in eight years, MKS noted

In earlier data, the Tokyo core CPI at 0.1 percent was as expected as was the unemployment rate at 3.3 percent. Household spending increased to 4.8 percent, as did the national core CPI at 0.1 percent against consensus of 0 percent.

In Europe, German import prices fell short at -0.2 percent, as did M3 money supply at 5.0 percent.

Still to come from the US are revised University of Michigan consumer sentiment and inflation expectations.

In the other metals, silver was down five cents at $15.79/15.84 per ounce, platinum $6.50 at $1,073/1,078 and palladium $1.50 at $673/678, having hit its lowest in two years on Thursday at $671.

(Editing by Mark Shaw)

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