Gold price slides as Greece reaches bailout deal
London (July 13) Gold prices fell on the London spot market Monday, as Greece reached a deal with its creditors after talks through the night.
Spot gold was down 0.7% at $1,155.04 a troy ounce in morning European trade, having hit a three-day low earlier in the session at $1,153.92 an ounce.
“Eurosummit has unanimously reached agreement,” said a tweet from the official Twitter account of European Council President Donald Tusk, just before the European market open. Tusk had presided over the talks.
Eurozone leaders unanimously agreed to give Greece another multi-billion-euro bailout package in exchange for stringent austerity measures.
Gold is typically considered a safe place to store cash during times of economic uncertainty, as it tends to maintain a stable level of value. However, as crises unwind and stability returns, demand for the metal is curtailed and prices tend to drift lower.
“Gold responded to the news by falling just shy of 1%,” said Commerzbank in a note to clients.
The deal is unlikely to place significant pressure on prices, analysts said, as gold failed to attract much haven buying during the debt crisis. But tough times look set to continue as the dollar is likely to weigh on gold prices.
“$1,150/oz may well be tested again this week, especially if [U.S.] retail sales data works in the favor of the dollar,” said Howie Lee, an investment analyst at Phillip Futures.
The precious metals were divided at the start of the week. Spot silver was down 0.9% at $15.423 an ounce, while spot platinum was 0.4% higher at $1,030.41 an ounce and spot palladium was up 1.1% at $655.44 an ounce.