Gold nudges higher on Greek deal hopes, China equity bounce

Otmane El Rhazi from The Bullion Desk.

Gold prices edged higher on Friday morning in the US after the Greek leadership presented a new counter-offer to its creditors, acquiescing on a series of cuts that it had disputed earlier.

Gold for August delivery on the Comex division of the New York Mercantile Exchange was last up $1.40 or 0.1 percent at $1,160.60 per ounce. Trade has ranged from $1,156.40 to $1,163.0.

As the deadline nears for a resolution to the Greek debt crisis, Prime Minister Alexis Tsipras submitted a new proposal that accepts most of the initial cuts presented to the country on June 26.

Investors seem to believe this latest chapter in the multi-year negotiations process will end in Greece remaining in the eurozone – the euro was last up 1.5 percent to 1.1199 against the dollar.

“Precious metals appear to be taking a breather here and tentatively staging a modest recovery from the lows printed this week,” Joni Teves, an analyst at UBS, said. “Market participants are likely to remain skittish until there is more clarity with Greece.”

Turning to Asia, Chinese measures to combat extreme share volatility has supported a recovery – the Shanghai Composite index has climbed more than 10 percent in the past two sessions, its biggest two-day rise since 2008.

But only 53 percent of the market is eligible for trading – some 1,300 companies are frozen out of the exchange. A ban on stockholders and executives from selling stakes for six months was implemented after the index plummeted to three-month lows on Wednesday.

China Securities Finance Corp has been providing liquidity to investors so the medium- and long-term outlooks are murky.

In the US, Federal Reserve chair Janet Yellen is holding a press conference at 11:30 central time. Market participants will scrutinise this to gauge the timetable for the first-interest rate hike – disagreement persists whether the US central bank will act later this year or early in 2016.

The euro shrugged off some disappointing data out of Europe earlier – it was last up almost a cent against the dollar at 1.1162. The German WPI at -0.2 percent was below the expected 0.5 percent while French industrial production fell short at 0.4 percent. Still, the Italian number bettered expectations at 0.9 percent.

Earlier, the Japanese PPI for June at -2.4 percent was weaker that the forecast -2.2 percent while consumer confidence at 41.7 was roughly in line with the predicted 41.9.

In wider markets, Germany’s DAX and France’s CAC-40 were last up 2.4 percent and 3.3 percent respectively.

As for other precious metals, Comex silver for September delivery rose 5.4 cents to $15.415 per ounce. Trade has ranged from $15.340 to $15.490.

Platinum for October delivery gained $12.20 to $1,034.60 per ounce while the most actively traded palladium contract was at $652.20, up $14.20 or 2.2 percent.

(Editing by Mark Shaw)

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