Gold Price Ends Higher After Greece Referendum
Washington (July 6) Gold futures snapped a three-day loss to end higher on Monday, after Greece rejected the bailout plan demanded by its international creditors with an increasing likelihood of the country exiting the eurozone. European Council President Donald Tusk has convened a special Euro summit meet on July 7 , to discuss the situation post the Greek referendum.
Markets came under pressure after the Greek people voted to reject austerity measures proposed by the country's international creditors. The 'no' vote in the referendum has added to recent concerns about Greece defaulting and exiting from the eurozone.
In an another development, the Greek government named Euclid Tsakalotos as the new Finance Minister of the country, replacing Yanis Varoufakis. Previously minister of international financial relations, Tsakalotos has been described as the "'big brain' of economic policy" for the Socialist government
Meanwhile, European Council President Donald Tusk has convened a special Euro Summit on July 7 to discuss the situation after the referendum in Greece . Ahead of the Euro summit, German Chancellor Angela Merkel and French President Francois Hollande are set to hold talks in Paris Monday .
The European Central Bank will discuss later today whether to continue the emergency liquidity assistance to Greece banks. The assistance from the ECB is vital for Greek banks to stay liquid.
Gold was also supported after some disappointing economic data from the US after activity in the service sector expanded at a modestly faster rate in June, although the index of activity in the sector rose slightly less than expected, a report from the Institute for Supply Management said Monday.
Gold prices were little changed Monday morning after Greece rejected its bailout plan, meaning it will
Gold for August delivery, the most actively traded contract, gained USD9.70 or 0.8%, to settle at USD1,173.20 an ounce, on the Comex division of the New York Mercantile Exchange on Monday.
Gold for August delivery scaled an intraday high of USD1,173.20 and a low of USD1,162.20 an ounce.
On Thursday, gold prices dropped USD5.80 or 0.5%, to settle at USD1,163.50 an ounce, on continued hopes of a deal in the Greek financial crisis, while paring some of the losses after the dollar weakened on some disappointing economic data from the US
Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, edged down to 709.65 tons on Monday, from its previous close of 711.44 tons.
The dollar index, which tracks the US unit against six major currencies, traded at 96.19 on Monday, down from its previous close of 96.39 on Thursday in late North American trade. The dollar scaled a high of 96.63 intraday and a low of 96.02.
The euro trended lower against the dollar at USD1.1060 on Monday, as compared to its previous close of USD1.1115 in North American trade late Thursday. The euro scaled a high of USD1.1115 intraday and a low of USD1.0995 .
On the economic front, activity in the US service sector expanded at a modestly faster rate in June, with a report from the Institute for Supply Management on Monday showing its non-manufacturing index inched up to 56.0 in June from 55.7 in May. A reading above 50 indicates growth in the service sector. Economists expected the index to rise to 56.4.
Eurozone investor confidence improved from a four-month low despite the Greece crisis, survey data from the think tank Sentix showed Monday. The investor confidence index rose unexpectedly to 18.5 in July from 17.1 in June, while it was forecast to fall to 16.
Germany's factory orders decreased for the first time in three months in May reflecting the weakness in domestic market. Factory orders fell 0.2% month-on-month in May, in contrast to a 2.2% increase in April, which was revised up from a 1.4% growth, Destatis reported Monday. This was the first decline in three months, but was slower than the expected decrease of 0.4%.
Germany's construction sector activity grew at the weakest pace in five months in June as new orders declined, survey data from Markit Economics showed Monday. The seasonally adjusted Purchasing Managers' Index, or PMI, for the construction sector, declined to 50.7 in June from 50.8 in the previous month.