Gold prices rangebound, Greek talks to resume on Saturday

Otmane El Rhazi from The Bullion Desk.

Gold prices were in the doldrums in US trading early on Friday while investors stuck to the sidelines ahead of yet more Greek negotiations this weekend.

Gold for August delivery on the Comex division of the New York Mercantile Exchange was unchanged at $1,171,80 per ounce. Trade has ranged from $1,169.30 to $1,178.00.

Eurozone finance ministers concluded another round of talks yesterday – attempts to broker a deal between Greece and its creditors have remained fruitless. Fresh talks are tabled for Saturday, with a 1.6-billion-euro repayment due to the International Monetary Fund by the end of the month hanging over proceedings.

Should Greece not have some kind of deal in place by Sunday night, Greek banks will remain closed on Monday and capital controls will be introduced, JP Morgan suggested. The chances of the country averting a default will start to look very slim.

“Uncertainty looms over the outcome of the negotiations between Greece and its creditors,” Scotiabank said. “On the other hand, recent positive US economic data has strengthened the dollar and has led markets to speculate that the US Fed could raise interest rates this year.”

Yesterday, US weekly unemployment was in line with forecasts at 271,000, the 18 straight month of readings below 300,000. The dollar was 0.1-percent stronger at 1.1192 against the euro.

Still, gold’s outlook in both the short and long terms remains bearish even should there be a resolution to the long-running Greek debt saga.

“Although we acknowledge a small pick-up in investor interest toward gold because of heightened uncertainty over Greece, we believe that the short-term risks are skewed to the downside because either a Greek default would force investors to liquidate riskier assets, including gold, or a deal would reduce safe-have buying,” FastMarkets analyst Boris Mikanikrezai said.

In data released earlier today, Japan’s 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 wider markets, Germany’s DAX was down 0.2 percent, while France’s CAC-40 was up 0.5 percent.

As for the other precious metals, Comex silver for July delivery was down 7.8 cents at $15.730 per ounce. Trade has ranged from $15.450 to $15.865.

Platinum futures for July delivery on the Nymex fell $7.50 to $1,074.90 per ounce, while the most actively traded palladium contract was at $674.50, down $4.85.

 

(Additional Reporting by Ian Walker, editing by Mark Shaw)

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