Gold ticks higher, markets await Sunday’s Greek plebiscite

Otmane El Rhazi from The Bullion Desk.

Gold prices climbed as the US holiday weekend approached while market participants shift their optics to Sunday’s Greek referendum.  

Gold for August delivery on the Comex division of the New York Mercantile Exchange rose $3.80 or 0.3 percent to $1,167.30 per ounce. Trade has ranged narrowly from $1,163.70 to $1,169.30 in subdued trading conditions related to Independence Day celebrations here.

In Greece, Prime Minister Alexis Tsipras continues to urge his countrymen to vote against the creditor’s proposal which adds cuts to pensions – a major theme Tsipras ran against during his election cycle.

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.

A default could force Greece from the bloc – a so called “Grexit”.

“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 US equities, the Dow Jones industrial average and S&P were down 0.2 percent and 0.1 percent respectively, while the dollar was 0.1 percent weaker at $1.1090 against the euro.

As for other precious metals, Comex silver for September delivery was last up 9.3 cents to $15.655 per ounce. Trade has ranged from $15.685 to $15.565.

Platinum for October delivery increased $1.00 to $1,085.0 per ounce, while the most actively traded palladium contract was at $685.0, down $9.15.

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