Gold Holds Steady, While Greece May Give Up On Cuts
Thursday morning trading in London saw gold rising to $1512 an ounce, bringing it to a weekly gain of 0.7 percent in the week so far, however by lunch time it fell back again, as did commodities and stocks held flat as the second austerity vote by Greece was due to take place on midday Thursday.
The Greek parliament on Wednesday passed the first out of two austerity votes with 155 to 138. Thursday’s second vote concerns how to implement the approved cuts and privatizations.
At the same time, gold prices in euro rose to €33,596 per kilogram (€1045 per ounce). They are still, however, down 1.3 percent on the week with the euro hitting a near-three-week high of $1.45.
A London-based bullion dealer said that the current increase in risk appetite has resulted in gains for precious metals, saying “Overall, the impact of the [Greek] yes vote is to assert a risk on approach.”
On a similar note, a Hong Kong trader said that should the second Greek vote pass “We may see gold test higher tonight,” although he did not expect gold to rise above $1520 per ounce.
A German precious metals refiner, Heraeus, said in its latest note that “Demand for physical gold [in Germany] went up considerably” as a result of the recent falls in the price of gold.
Following continued riots in Athens, experts, including Andrew Balls, head of European portfolio management at PIMCO, agreed that the political problems experienced in the country definitely bring with them a risk “…that at some stage it’s the Greeks who give up on the program.”
Warwick McKibbin, Reserve Bank of Australia board member, warned that “There’s almost guaranteed collapse or crisis in the Eurozone.” He added that there are “serious global inflation problems and a policy response looming…all of these have implications for relative commodity prices.”
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