Gold Down, Hits 7-Week Low, on Greece-EU Deal, Bearish Outside Markets

New York (Feb 23)  Gold prices are under moderate selling pressure and hit a seven-week low in early U.S. trading Monday, on some better risk appetite in the market place and amid bearish outside markets—a stronger U.S. dollar index and lower crude oil prices. April Comex gold was last down $7.80 at $1,197.00 an ounce. May Comex silver last traded up $0.15 at $16.47 an ounce.

There was a last-minute deal reached late Friday between Greece and the European Union--a four-month extension of Greece’s present financing package. European stock and bond markets on Monday were buoyed on the news. Safe-haven gold sold off. However, this is yet another bandaid placed over a gaping wound that has plagued the European Union for years. Also, other details of Greece’s future financing from the EU have to be worked out this week.

European markets also got some good news to boost investor risk appetite from a report that showed German business confidence on the rise for the fourth straight month. The Ifo business index came in at 106.8 in February versus 106.7 in January. However, the February reading was not as high as expected by the market place.

The Russian ruble saw more downside pressure Monday as Moody’s late Friday downgraded Russia’s credit rating to junk status. I said last week but it bears repeating: Russia is likely to be the major geopolitical hotspot in the coming months—more so than the European Union. Such would be a bullish underlying factor for gold.

A big markets event this week will be Fed Chair Janet Yellen making trips to Capitol Hill to testify before the U.S. Congress on the state of the economy. She speaks on Tuesday and Wednesday.

China’s Lunar New Year holiday ends at mid-week, which could make for quieter markets in Asia early this week.

U.S. economic data due for release Monday includes the Chicago Fed national activity index, existing home sales, and the Texas manufacturing outlook survey.

Source: KitcoNews