Gold price falls on dollar; Greek vote fails to spark strong demand
New York (July 6) Gold fell on Monday as a robust dollar outweighed the impact of lower equity markets and some retail demand after a Greek vote rejected the terms of a bailout package that could set Athens on a path out of the euro zone.
In a referendum on Sunday, Greeks overwhelmingly rejected conditions of a rescue package from creditors. Official figures showed 61 per cent of Greeks had rejected a deal that would have imposed more austerity measures on an already ravaged economy.
Spot gold was down 0.3 per cent at $1,163.50 an ounce by 0956 GMT, while U.S. gold futures were unchanged at $1,163.70 an ounce.
The metal, typically seen as an alternative investment in times of financial and economic uncertainties, rallied during Asian hours, reaching a near one-week high of $1,174.70, but failed to hold onto gains, as the dollar gained versus the euro.
The single currency was weighed down by the uncertainty over Athens' financial situation and its future in the euro zone. European leaders called a summit for Tuesday to discuss their next move.
"There isn't the fear of a pan-European crisis, as it was the case a few years ago, when you saw a rush to gold, which was already in a bull market," Macquarie analyst Matthew Turner said.
Gold had reached an all-time high of $1,920 in 2011, supported by euro zone sovereign debt fears and a weaker dollar.
"We are now in a bear market, which is negatively impacting investors' sentiment," Turner added. "People are still not sure they need a safe haven and if they do need one, they are not sure it should be gold."
The Greek vote leaves the country in uncharted waters, risking a banking collapse Without more emergency funding from the European Central Bank, Greece's banks could run out of cash within days.
"Unless (banks') lending (to Greece) is topped up, the banks risk running out of money, which would mean a new level of escalation in the debt drama and should lend support to the gold price," Commerzbank said in a note.
Investors were mostly still focused on expectations the Federal Reserve will raise interest rates from record lows this year, which would increase the opportunity cost of holding gold.
Silver was down 0.7 per cent at $15.56 an ounce, platinum dropped 1.3 per cent to $1,064.75 an ounce and palladium fell 0.8 per cent to $674 an ounce, close to a two-year low hit last week.