Gold steady at start of potentially hectic week

Otmane El Rhazi from The Bullion Desk.

Gold futures posted modest gains on Monday but volatility could heat up as more Greek debt talks and the next Federal Reserve meeting are on this week’s calender.

Gold for August delivery on the Comex division of the New York Mercantile Exchange closed up $6.60 at $1,185.80 per ounce. Trade ranged from $1,171.90 to $1,185.90.

“Metals continue their range bound trade ahead of this week’s Fed meeting, which is expected to provide a clearer picture on the Fed’s outlook for the US economy and when they are likely to move on rates,” said Peter Hug, global trading director at Kitco Metals, who added that the anticipation of a more hawkish tone put the metals on the defensive overnight.

“The flip side was the continued deadlock on the Greece debt negotiations, which are quickly coming down to the wire. We would suggest gold will remain contained in a $1,178 to $1,187 range but fully expect this level will be taken out by Wednesday, if not earlier. Expect a ride this week,” Hug added.

In Brussels over the weekend, a deal was not struck as talks between Greece and its creditors broke up after less than an hour. This once again raised concerns of Athens being unable to repay 1.6 billion euros owed to the International Monetary Fund by the end of this month. A default could see Greece exit the eurozone.

The forthcoming eurogroup meeting on June 18 is now being proposed as the next opportunity for negotiations.

Later this week, the Federal Open Market Committee will release its June policy statement. The US central bank is not expected to raise interest rates at this meeting but it could lay the foundation for action later this year.

In the wider-markets, the euro recouped earlier losses – it was last 0.05 percent stronger at 1.1276 against the dollar, while the Dow Jones industrial average and S&P 500 were down 0.54 percent and 0.43 percent respectively.

In today’s data, June’s Empire State manufacturing index was -2.0 – it had been seen at 5.8 – but the NAHB housing index for June was better than expected at 59.

As for the other precious metals, Comex silver for July delivery ended up 26.5 cents at $16.090 per ounce. Trade ranged from $15.810 to $16.080.

Platinum futures for July delivery on the Nymex closed down $8.20 at $1,088,60 per ounce, while the most-actively traded palladium contract finished at $734.15 per ounce, down $4.00.

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