Gold price takes heart from weaker dollar, Greece wrangling

EDGWARE (Scrap Monster): Gold rose 0.4 percent on Friday morning, taking support from a weaker dollar and tentative hopes that Greece will seal to deal to secure its future in the eurozone.

The spot gold price was last at $1,211/1,212 per ounce, up $5 on Thursday’s close. Trade has ranged from $1,205.5 to $1,215 so far.

The euro was last 0.5 percent stronger against the dollar at 1.1166 after Greek Prime Minister Alexis Tsipras, German chancellor Angela Merkel and French president Francois Hollande met last night to discuss a cash-for reforms deal that would allow it to make its debt repayments next month and join the ECB’s quantitative easing programme.

Its next repayment to the IMF of 305 million euros is due on June 5; still, Athens is holding firm on pensions and labour reforms and there are concerns that talk of a deal being sealed within the next 10 days are more hot air.

“A weaker dollar and concerns over Greece could prompt rallies,” FastMarkets’ William Adams said.

Yesterday’s mixed US data pushed the dollar lower. US existing home sales fell by 3.3 percent month-on-month in April to an annualized rate of 5.04 million, which was well below the 5.23 forecast. The flash Markit manufacturing PMI fell to 53.8 in May from 54.1 in April and new orders growth dropped to the slowest pace since January 2014.

“US data has been mixed and that is probably enough to make the markets feel confident that the Fed will not be in a hurry to raise interest rates – as a result the dollar may struggle on the upside,” Adams said.

The economic agenda is quite busy today – the Chinese leading index at 1.1 percent was up from 0.5 percent previously. From the eurozone, German final GDP was as expected at 0.3 percent while the country’s Ifo business climate was better than the forecast at 108.5.

Italian retail sales and US CPI and core CPI are scheduled for release later.

As well, a host of central bankers are speaking today. Federal Reserve chair Janet Yellen is also expected to give a speech

“Investors will look for clues as to any timing of policy change in her address, although it is more likely that the theme of data dependency will make Yellen avoid giving any explicit guidance,” MKS said.

Yesterday’s release of the Federal Open Market Committee (FOMC) minutes from the April 28-29 meeting effectively ruled out a rise in interest rates in June, in line with market expectations, but it gave no clue on whether a rise from near-zero levels could happen in September, December or even in 2016.

In the other precious metals, silver was last at $17.28/17.33 per ounce, up $0.14. Platinum at $1,156/1,161 was up $4 while palladium was little changed at $779/784.

Courtesy: www.bulliondesk.com