Gold price slips despite Greek crisis on weak safe-haven bids, robust dollar

Singapore (Jun 30)  Gold dipped on Tuesday as it failed to garner strong safe-haven bids even with Greece heading for a debt default later in the session, while a robust dollar and a recovery in stock markets also weighed.

Spot gold fell 0.3 to $1,176.35 an ounce by 0638 GMT, after gaining 0.6 percent in the last two sessions. For the month, the metal is headed for a 1 percent decline.

The dollar gained 0.4 percent against a basket of major currencies. Asian shares and U.S. stock futures also rose on Tuesday after overnight losses, though concerns over Greece remained.

"Surprisingly, the safe-haven bids haven't materialised," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong. "Maybe they will once we see the impact of a Greek default spreading to other countries in Europe and elsewhere."

"Gold price could possibly move sharply after the Sunday referendum," he said.

Greece is just hours away from defaulting on a 1.6 billion
euro loan from the International Monetary Fund. Talks with
creditors broke down over the weekend, with Prime Minister
Alexis Tsipras calling for a bailout referendum on July 5.
    Tens of thousands of Greeks rallied on Monday to back their
leftwing government's rejection of a tough international
bailout.
    The breakdown of talks has pushed the European Union and
euro zone into uncharted terrain. The Athens stock exchange was
closed like the banks, but other financial markets fell on fears
that Greece could be heading out of the euro. In overnight
trading on Wall Street, all three major stock indices tumbled.
    Despite the risk-averse sentiment in the markets, bullion
pared some of its gains on Monday, in what MKS Group traders
said was a "relatively disappointing day for the precious
complex considering the turmoil and uncertainty surrounding the
Greek situation."
    Though gold is usually seen as an alternative investment
during times of financial and economic uncertainties, the
safe-haven gains tend to be short lived.
    Gold has been weighed down this year on expectations the
Federal Reserve will hike U.S. interest rates later this year.
Higher rates could dent demand for non-interest-paying bullion.
    The fallout from Greece in the United States is expected to
be modest and not enough to throw the Fed's likely September
rate hike off course, said former Fed officials and analysts.
 
 Technically, gold still remains weak, and could likely test
$1,163, analysts at ScotiaMocatta said.

Source: Reuters