Gold prices reversed direction in the US on Friday morning while Greek voters prepare to head to the ballot box on Sunday to determine the country’s future in the eurozone.
Gold for August delivery on the Comex division of the New York Mercantile Exchange rose $4.10 or 0.4 percent to $1,167.60 per ounce. Trade has ranged narrowly from $1,163.70 to $1,169.30 in subdued trading conditions related to Independence Day celebrations here.
Investors are also cautious ahead of the the result of the Greek referendum on Sunday on its creditors’ proposed cash-for-reforms deal. Greek Prime Minister Alexis Tsipras has repeatedly urged citizens to vote against the proposals, which would put the Mediterranean country on a path to exit the bloc.
Without additional lending, Greece will default on its July 20 repayment to the European Central Bank (ECB) after missing a payment to the International Monetary Fund (IMF) on Tuesday.
“The Grexit saga is helping gold prices on two fronts – Greece’s default on its payment to the ECB on Tuesday and the risk it will exit the eurozone is bolstering safe-haven demand,” FastMarkets analyst Tom Moore said. “In turn, there is a growing risk that this will start to drag on the currency bloc and then the global economy, providing another reason for the FOMC to stay its hand over rate rises.”
Greece requires additional bailout funds of around 50 billion euros until 2018 under the existing bailout conditions, the IMF claimed, cutting its Greek growth prospects for 2015 to zero from 2.5 percent previously.
In data, the Chinese HSBC services PMI at 51.8 missed consensus of 53.8. In the eurozone, the Spanish services PMI at 56.1 was short of consensus at 58.0 as was the German number at 53.8 against expectations of 54.2. The Italian number bettered forecasts at 53.4, with the aggregate eurozone figure as expected at 54.4. EU retail sales at 0.2 percent also came in better than consensus.
In equities, the rout in Asian stock markets continued, with the SCI closing 5.4 percent lower – it is down nearly 25 percent on a one-month basis. Germany’s DAX was last up 0.1 percent while France’s CAC-40 was down 0.3 percent. In currencies, the euro was 0.1 percent stronger at 1.1098 against the dollar.
As for other precious metals, Comex silver for September delivery was last up 5.8 cents to $15.620 per ounce. Trade has ranged from $15.565 to $15.670.
Platinum for October delivery increased $0.50 to $1,084.50 per ounce, while the most actively traded palladium contract was at $689.40, down $4.75.
(Additional reporting by Ian Walker, editing by Mark Shaw)
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