Gold price stays down as optimism for Greek debt deal diminishes safe-haven appeal
Beijing-China (Jun 23) Gold retained sharp overnight losses on Tuesday as its safe-haven appeal was diminished by increasing hopes that Greece would reach a deal with its creditors to avoid a default, and strength in equities.
Spot gold was at $1,182.90 an ounce by 6:18 pm Beijing time, down $1.2 from the previous session and clinging to the 1.3 percent loss on Monday.
Bullion, often seen as an alternative investment during times of uncertainty, had seen modest support in the last few days as Greece struggled to strike a deal with its international creditors to avoid a default that could have seen it exit the eurozone.
But Greece took a step back from the abyss on Monday with the presentation of new budget proposals that eurozone leaders welcomed as a basis for a possible agreement in the coming days.
European Council President Donald Tusk said the aim was to have the Eurogroup finance ministers approve a cash-for-reform package on Wednesday evening and put it to eurozone leaders for final endorsement on Thursday morning.
"It seems that barring some last-minute surprises, the Greek talks will likely result in an agreement that would kick the can down the road, but which would avoid a default," said INTL FCStone analyst Edward Meir, noting this could mean further selling pressure on gold.
"With the removal of the 'Greek irritant' as a bullish issue, gold will likely revert to trading more on its own fundamentals, which at this stage, do not look that inspiring," Meir told Reuters.
Physical demand in top consuming region Asia has been sluggish as monsoon concerns weighed on demand in India and a better-yielding stock market kept buyers away in China.