The Greek prime minister said he would form a new government as euro zone finance ministers conceded that a deal on a second international bailout of the ailing country was now unlikely to be reached at a summit next week.
Spot gold fell $4.99 an ounce to $1,524.86 an ounce by 0557 GMT (1:57 a.m. ET) after rising for a second straight session to around $1,533 on Wednesday on declines in equities. Gold is well below a lifetime high around $1,575 touched in early May.
"Investors are skeptical that a new government will be able to convince the disillusioned masses to accept more austerity measures. Instead, much needed budget cuts could be delayed," said Ong Yi Ling, investment analyst at Phillip Futures.
"Until Greece produces a plan for future debt sustainability, aid could be withheld. As the likelihood of a technical default increases, a flight to safety could cause gold and the dollar to rise in tandem."
The euro fell to a three-week low on Thursday and dropped below its 100-day moving average for the first time since February, with traders citing ECB policy maker Nout Wellink saying in a Dutch newspaper report that the European bailout fund should be doubled.
As the euro sags, the dollar index .DXY held near a three-week high after having jumped 1.7 percent on Wednesday -- its biggest one-day percentage gain since August 2010.
The escalating Greek problems and data showing the U.S. economy is facing a troubling mix of weaker growth and higher prices triggered selling on Wall Street, adding to pressure on Asian equity markets and other riskier assets on Thursday.
The physical market was subdued after some trading was reported overnight. Premiums for gold bars were steady at 60 to 80 cents an ounce to the spot London prices in Singapore.
"I guess the premiums are competitive at 80 cents. I am just trying to push for some volume among the small tiny ripples," said a dealer in Singapore.
"We did see some buying and selling last night, but still there was nothing significant."
Silver lost 49 cents to $35.28 an ounce, below a record at $49.51 an ounce in April.
"In our view, interest in silver is likely to be muted over the summer months, particularly as the metal lacks support on the economic front," BNP Paribas said in a report.
"While silver may outperform gold toward the end of the year, we do not expect the gold/silver ratio to decline back to the low 30s."
The gold-silver ratio, or how many ounces of silver can buy one ounce of gold, was at about 42 after falling to around 31 in late April, its weakest since the early 1980s.
In the energy market, oil rebounded on Thursday, with Brent up 0.8 percent, after its second biggest fall in two years the previous day created buying opportunities against a backdrop of tumbling U.S. crude inventories and uncertainty over OPEC output.
Source: Reuteres.com
Vivek Agrawal
Summer Intern-Fundamental Analysis
DENIP Consultants Pvt. Ltd.
No comments:
Post a Comment