Gold eases as Greek debt worries recede

Gold eased on Wednesday after receding worries about Greece’s debt crisis quashed some of the appetite among investors for safe havens, while the rise in the single European currency dented the euro price of bullion.

Gold came off a four-week high of $1,540.50 hit in the previous session, as European officials met to sketch out options for a second bailout package for Greece, boosting investor risk appetite.

Gold in euros slipped to its lowest since May 20 as the single European currency hit four-week highs against the U.S. currency, while gold in dollars [XAU= 1531.96 -2.69 (-0.18%) ] fell for a second day, down 0.2 percent at $1,531.99 an ounce.

Gold fell by about 2 percent in May, although the price remained on track for a near-8 percent gain this year, fuelled in large part by investor nerves over the euro zone’s finances.

“Whether it’s Greece or whether it’s the potential ramifications for Italy or Spain, that is a big bid to the gold market,” said Natixis commodities analyst Nic Brown.

“The general theme has certainly been events in Greece and Europe, which have been behind this last move, which is so obvious in the euro-denominated price of gold and probably the fact that the euro has rebounded, which is slowing that down.”

Investor demand for gold retreated in May, as reflected in the net outflow of metal from global exchange-traded funds, which fell nearly 1 percent last month in their first monthly decline since February.

“Technically, it looks like that gold might be going low, but I don’t see any justification for it to break much below $1,520,” said Darren Heathcote, head of trading at Investec Australia. “I don’t think we are close to having it (the Greek debt crisis) completely solved yet, and the market will remain skeptical and well supported.”
Mexico’s central bank moderately expanded its gold holdings in April, buying 190,000 ounces of gold, worth nearly $282 million based on average spot price of the month, after buying more than $4 billion in bullion in March.

On the physical market, dealers earlier spotted light scrap selling from Thailand, and muted buying from India and China, the world’s top two gold consumers.

Investors are also looking ahead to U.S. non-farm payrolls data due on Friday for evidence of the ability of the world’s largest economy to generate jobs, after sluggish data on Wednesday suggested U.S. economy was losing momentum.

Spot silver [XAG= 37.98 -0.46 (-1.2%) ] declined 0.9 percent to $38.09.

U.S. silver [SICV1 37.855 -0.45 (-1.17%) ] eased half a percent to $38.11. It fell 21.1 percent in May, leading losses in the commodities market.

ETF holdings of the metal fell for a second consecutive month in May, dropping by over 40 million ounces to their lowest this year.

The bank regulator in major silver consumer China told banks to adequately warn investors who deal in silver forwards of the related trading risks after wild price swings in the past month.

The London Bullion Market Association said it would launch a silver forward price curve with immediate effect. This follows the launch of its gold forward price curve in January this year.

Platinum [PLCV1 1822.90 -11.10 (-0.61%) ] and palladium [PACV1 771.25 -7.70 (-0.99%) ] stabilized following Tuesday’s sharp price rises.

Palladium, which rose by 2.5 percent on Tuesday in its biggest daily rise in a month, was last quoted up 0.2 percent at $775.97 an ounce, while platinum, which rose 1.7 percent the day before, was last down 0.3 percent at $1,823.24 an ounce. – Reuters

Tags: gold prices