first majestic silver

Gold price little changed as investors weigh Fed rate-hike timing, Greek drama

July 6, 2015

New York (July 6)  Gold futures were basically flat on Monday, finding modest haven-related buying interest on the heels of Greece’s deepening debt crisis as investors mulled the likelihood of a Federal Reserve interest-rate hike in the coming months.

Gold’s muted gains come after Greek voters on Sunday overwhelmingly rejected their international creditors’ conditions for providing much-needed monetary aid. The referendum is seen significantly raising the chances Greece will exit European currency bloc. Read the latest news on the Greek debt crisis

Nonetheless, markets in general, and gold in particular, are taking the result mostly in stride.

“This partly reflects the markets’ generally relaxed attitude to the prospect of Grexit and the risks of contagion in particular…In addition, with the U.S. economy strengthening and the Fed still likely to raise rates later in the year, what safe-haven demand there is has been mopped up by the dollar,” said Julian Jessop, head of commodities research at Capital Economics, in a note.

The dollar gained ground against the euro EURUSD, -0.3239% A stronger dollar is usually seen as a negative for commodities priced in the currency, as it makes them more expensive to users of other currencies.

There is still a “significant” chance, however, that the threat of a Greek euro exit, or “Grexit” will unsettle global markets and lift gold, Jessop said. But the lack of a safe-haven lift so far and the likelihood the Fed could move to lift rates as early as September prompted Capital Economics to lower its end-2015 gold forecast to $1,275 an ounce from $1,400, Jessop wrote.

Still, John Person, president of NationalFutures.com, said gold may be in a position to rally from its current levels.

“Cash commodity holdings such as aluminum, copper, silver and gold may have been used as margin collateral from the recent stock-market debacle” in China, he said. “As the Chinese stock market stabilizes, then I would be watching for the hedges to be lifted against these trades and for gold prices to rally.”

In other metals trade, October platinum PLV5, -2.37%  fell $25.20, or 2.3%, to $1,058.80 an ounce, while September palladium PAU5, -2.78%  lost $20.55, or 3%, to $673.60 an ounce.

September copper HGU5, -3.50%  fell 9.4 cents, or 3.6%, to $2.537 an pound.

Capital Economics also cut its end-of-2015 price forecasts for silver to $18.70 an ounce from a previous forecast of $21, for platinum to $1,200 from $1,300 and palladium to $820 from $900. But it also said it expects precious-metal prices to recover in 2016, “once investors return to focus on the strong fundamentals.”

Sourec: MarketWatch

Gold Eagle twitter                Like Gold Eagle on Facebook