Gold prices fall on renewed risk appetite
Frankfurt (Feb 23) Gold prices in Europe were much lower on Monday after Greece finally struck a deal with its creditors.
Spot gold was trading at $US1,192.86 a troy ounce, down 0.7 per cent, in morning European trade -- hitting a seven-week low earlier in the session at $US1,190.98 an ounce.
"Greece managed to get a four-month extension on its current bailout programme from the troika, which dimmed the appeal of gold as a hedge against uncertainty," Phillip Futures analyst Howie Lee said.
The Greek debt deal extension has been received with a measure of belief in the market and the number of those betting against gold prices has dwindled to its lowest level in six weeks.
"Virtually no-one on the markets still expects the deal to fall through. The decline in the price of gold that has been observed for the past four-and-a-half weeks has gone hand-in-hand with a noticeable withdrawal on the part of speculative financial investors," Commerzbank analysts said.
Gold is traditionally considered a safe-haven bet as investors rush to store their cash in the metal during periods of socio-economic uncertainty. In times of relative or impending calm, investors are more likely to pile their money into assets that carry both greater risk and greater returns.
"Our longer-term view on gold remains bearish as the progressing economic recovery should weigh on Western world investors' safe-haven demand and reduce their willingness to pay for gold as insurance," said Carsten Menke, a commodities research analyst at Julius Baer.
Silver was down 0.5 per cent at $US16.148 an ounce, platinum was down 0.3 per cent at $US1,157.92 an ounce, and palladium was down 0.3 per cent at $US774.50 an ounce.