Umpteenth Greek Summit Sees Gold Prices Fall, Options Expiry Should Keep Prices Near $1200

Published: Jun 23, 2015 13:40
Gold prices erased two-thirds of last week's 1.5% jump against a rising US Dollar on Monday, dropping back from $1200 per ounce.

By Paul Ploumis 23 Jun 2015 Last updated at 01:52:47 GMT

EDGWARE (Scrap Monster): Gold prices erased two-thirds of last week's 1.5% jump against a rising US Dollar on Monday, dropping back from $1200 per ounce as Eurozone stock markets held strong gains amid hopes of a quick deal at the latest emergency summit on Greece's debt crisis.

Five years after the first such summit, "We are approaching an absolutely decisive moment," French radio was told by the European Union's economic affairs commissioner Pierre Moscovici today.

Greece's proposals "go in the right direction [and make] a good basis for an agreement," he said.

But "we have so far received no substantive proposals," countered Germany's finance minister Wolfgang Schäuble ahead of today's meeting in Brussels.

Whatever comes from today's meeting, says German magazine Spiegel online, one thing "is certain from this umpteenth summit:

"It will not be the last."

Gold prices "are coming off as the 'Greece premium' is wearing out," reckons one London bullion bank in a note.

"Further gains are possible if the situation in Greece deteriorates," says Japanese conglomerate Mitsubishi's analyst Jonathan Butler, "but given that the Dollar is likely to gain strength on the back of this, such gains may be capped."

Weaker Eurozone bond prices rallied as the Greek summit began Monday, pushing borrowing costs down for Portugal, Italy and Spain, as well as Greece.

Platinum prices meantime sank Monday to new 6.5-year lows, down some 11% for 2015 to date and driving the white metal's discount to gold – more typically a premium in the modern era – to a 3-year record at $125 per ounce.

Expecting a reversal of that trend, "Selling gold on price strength, through options or relative value (against platinum), remains our main call over the summer months," says another London bullion bank in a note.

Gold prices today dropped back to $1186 per ounce in wholesale London trade, reversing almost all of last week's rise from near 2015 lows in Euro and also Sterling terms.

But for Dollar traders, gold's three-week high on Friday still means "prices are fluctuating within a very narrow band in rather quiet conditions," says US brokerage INTL FCStone, adding that last week's gains were "boosted by concerns about Greece and the lingering after-effects of the Federal Reserve's rather dovish policy statement."

"Physical [trading] remains subdued," says ICBC Standard Bank's commodities team, with gold premiums in India and China – the two largest consumer markets – "falling to flat" with London prices last week.

This week's expiry of July gold options on the US Comex sees heavy interest around $1200 per ounce, Standard goes on, which "should help anchor prices near" that level.

Overall in US gold futures and options, latest data from regulator the CFTC show speculators raising their bearish bets on gold prices last week to the highest level since November's slump to new 5-year lows.

Bullish bets also grew however, helping the net long position held by non-industry traders rise from the previous week's 1-month low.

Courtesy: www.bullionvault.com
 

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

For any inquiries or for more information, please contact: lemonzhao@smm.cn
For more information on how to access our research reports, please contact:service.en@smm.cn
Related News
Oman Opposes Transit Fees in Strait of Hormuz, Open to Maritime Service Charges Discussions
9 hours ago
Oman Opposes Transit Fees in Strait of Hormuz, Open to Maritime Service Charges Discussions
Read More
Oman Opposes Transit Fees in Strait of Hormuz, Open to Maritime Service Charges Discussions
Oman Opposes Transit Fees in Strait of Hormuz, Open to Maritime Service Charges Discussions
Oman has made it clear that it opposes the imposition of transit fees on vessels navigating the Strait of Hormuz, yet it remains open to discussing charges related to maritime services. Meanwhile, some major European powers have acknowledged that levying passage fees in the Strait of Hormuz appears to have become an unavoidable prospect. Earlier reports revealed that Oman had put forward a proposal to collect service fees from ships transiting the Strait of Hormuz.
9 hours ago
US Job Growth Slows Sharply in June, Unemployment Rate Drops to 4.2%
9 hours ago
US Job Growth Slows Sharply in June, Unemployment Rate Drops to 4.2%
Read More
US Job Growth Slows Sharply in June, Unemployment Rate Drops to 4.2%
US Job Growth Slows Sharply in June, Unemployment Rate Drops to 4.2%
Data released by the US Bureau of Labor Statistics showed that US nonfarm payrolls added just 57,000 jobs in June, a figure far below market expectations of 110,000 and the lowest level in nearly four months. Meanwhile, employment data for April and May were cumulatively revised down by 74,000. On the unemployment rate front, the June reading unexpectedly fell to 4.2%, the lowest level since June 2025, compared with market expectations of 4.3%. Following the data release, traders broadly pushed back their expectations for the US Fed’s rate hike plan to December of this year.
9 hours ago
ECB in Good Position After June Hike, Future Policy Data-Dependent: Muelen
9 hours ago
ECB in Good Position After June Hike, Future Policy Data-Dependent: Muelen
Read More
ECB in Good Position After June Hike, Future Policy Data-Dependent: Muelen
ECB in Good Position After June Hike, Future Policy Data-Dependent: Muelen
法国央行行长、身为欧洲央行管委的穆伦称,欧洲央行在6月完成加息后已处于“良好位置”。当下就判断7月和9月会议的政策走向还为时尚早,未来政策会秉持数据依赖原则,既不会给出前瞻性指引,也不表明会开启新一轮持续加息周期。
9 hours ago