Gold edges down on Greece aid delay concerns
Gold weakened on Thursday, tracking a weaker euro, as hopes of solving Greece’s crisis dimmed, with the eurozone pondering a delay of the bailout for the debt-ridden nation.
Spot gold rallied 1 percent at one point on Wednesday on expectations of a solution for the Greek crisis, but sentiment soured after news that eurozone finance officials were considering delaying parts, or even all, of a second bailout program for Greece.
Spot gold lost 0.6 percent to $1,717.91 an ounce by 0617 GMT (1:17 a.m. ET) on Thursday, reversing gains in the previous session.
U.S. gold fell half a percent to $1,719.70.
Investors are keenly watching the twists and turns of Greece’s struggle to convince its international lenders to grant an urgently needed bailout to avoid a messy default.
Gold prices have been moving between $1,700 and $1,730 an ounce so far this week, unable to break the range as the uncertainty sapped trading interest.
“Things will get resolved, but it is going to be a slow process and it will continue to be frustrating for investors,» said Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong.
Market participants will closely watch a ministerial Europe group meeting on February 20, during which Greece hopes to secure the bailout, even though European officials said Athens still has questions to answer.
Technical signals remained bearish for gold in the near term. Spot gold could fall towards $1,701 an ounce during the day, said Reuters market analyst Wang Tao.
Global gold demand struck a 14-year high in 2011, driven by record investment demand, buying in China and purchase by central banks, said the World Gold Council in a report.
Spot silver, the front-runner of the precious metal complex, fell 0.6 percent to $33.18 an ounce. It has risen nearly 20 percent so far this year, beating gold’s 10-percent ascent.
Silver fell to a one-week low in the previous session, following the tumble in base metals, as the murky situation in Europe dimmed prospects of industrial demand for metals.
“Industrial demand in China is probably flat, if not slightly lower, compared to the same time in the past few years,» said a Shanghai-based trader.
Though expectations of further monetary easing from key central banks around the world, and the consequential rising inflation outlook, could benefit gold and other precious metals, the uncertain economic picture may put pressure on those with industrial applications, such as silver, platinum and palladium.
Spot platinum hit a one-week low at $1,614 an ounce, and recovered to $1,614.50.
The rising tensions between Iran and the West could potentially support safe-haven interest in gold.
[Reuters]
