Gold Sees Late Rally on Safe-Haven Demand, Short Covering

By  Paul Ploumis 07 Jul 2015  Last updated at  04:01:45 GMT

(Kitco News) -Gold prices rebounded in later trading Monday to score moderate gains on some safe-haven demand, and on short covering and bargain hunting following recent selling pressure. Events in Greece and China prompted some safe-haven buying in gold. However, sharply lower crude oil prices that hit a three-month low Monday did limit the upside in the yellow metal. August Comex gold was last up $8.90 at $1,172.50 an ounce. September Comex silver was last up $0.183 at $15.75 an ounce.

 

The Greece public on Sunday voted no to new austerity measures to keep the country receiving financial aid from the European Union and International Monetary Fund. Odds are growing that Greece will leave the European Union monetary system. Negotiations between Greece and the EU/IMF are continuing despite the no vote. Reports said there will be another EU summit held on Tuesday.

 

 Markets reactions to the Greek “no” vote have not been extreme—so far--but there is some anxiety in the market place, which finally prompted some modest safe-haven demand for gold in late trading Monday. European stock markets were lower but not sharply lower Monday. U.S. stock indexes were also weaker. The Euro currency traded moderately lower.

 

Keep in mind history has shown that markets can have a delayed reaction to events like the Greece referendum vote. It would be premature to assume the Greece matter will just fade away in the coming weeks. In fact, such a scenario is unlikely.

 

Events in Greece have overshadowed China’s heretofore overheated stock market, which is now down nearly 30% in just three weeks’ time. The Chinese government enacted new measures over the weekend to stabilize the China equities market, including an injection of government money to stabilize the recent sell off. Many observers argue recent economic developments in China are more important to world markets than the Greece matter. China’s economy—which is the world’s second-largest—is starting to wobble after several years of very strong growth rates. The China news also likely prompted some safe-haven demand for gold.

 

The London P.M. gold fix is $1,166.00 versus the previous A.M. fix of $1,164.25.

 

Courtesy: Kitco News