Gold price slips, investors left shaken by Greek turmoil

Otmane El Rhazi from The Bullion Desk.

Gold prices reversed Monday’s slight gains on Tuesday in the US on the deadline day for Greece reaching a deal with its creditors before its bailout runs out.

Gold for August delivery on the Comex division of the New York Mercantile Exchange fell $7.70 or 0.7 percent to $1,171.30 per ounce. Trade has ranged from $1,168.90 to $1,180.0.

After pulling out of talks with creditors over the weekend, he Greek government said yesterday it will not repay the latest tranche of 1.6 billion euros of monies owed to the International Monetary Fund (IMF) today.

Instead, Athens announced a referendum for June 5, allowing Greek citizens to vote on their future. Prime Minister Alexis Tsipras made a television appeal on Monday to urge Greeks to vote against the austerity measures proposed by its creditors that it has been campaigning against for the last five months.

But confusion reigns – reports of new proposals from some quarters have been rebuffed in others, Spanish Prime Minister Mariano Rajoy has said that a ‘no’ vote in Sunday’s referendum must trigger a Grexit while German finance minister Wolfgang Schäuble said the opposite and rumours of the resurrection of the drachma have been denied.

Tsipras may even be ready to meet with senior eurozone officials later today to sign off on a revised deal even before the weekend vote.

Still, gold has not seen a direct benefit from the chaos although it is typically seen as a safe haven for investors at times of geopolitical strife.

“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.

In wider markets, Germany’s DAX and France’s CAC-40 were each up 0.1 percent, while the euro was 0.2 percent softer at 1.1216 against the dollar, up almost a cent on earlier lows.

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 due from the US later.

In the other precious metals, Comex silver for July delivery was down 8.9 cents at $15.575 per ounce. Trade has ranged from $15.530 to $15.725.

Platinum futures for July delivery on the Nymex fell $2.40 at $1,079.00 per ounce, while the most-actively traded palladium contract was at $672.25, up $5.80.

(Editing by Mark Shaw)

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