Dollar Gold Falls Towards 'Key Support' at $1170 as Greece Delays IMF Repayment, China's Stock Market Hits Fresh Volatility
Thursday, 6/04/2015 17:49
DOLLAR GOLD prices touched their lowest level since 1st May in London trade Thursday and fell near 4.5-month lows against the Euro as the single currency extended its surge amid falling bond and world equity prices.
Gold prices then steadied around $1175 per ounce as the Euro retreated one cent from 2-week highs above $1.1370, and bond yields eased lower as debt prices rallied with European share markets.
The Greek stock market halved an earlier 3% plunge as Athens
leaked the list of reforms it's proposing to its Eurozone, International Monetary Fund and European Central Bank lenders
Athens then said it won't repay €330 million due to the IMF tomorrow, but instead roll that into the total €1.6bn due by end-June.
"Greece has so far made all its repayments," said Athens' finance minister Varoufakis in an interview with Sky's Ed Conway this afternoon in London, "and that's been without any [new] disbursements from our creditors.
"But at some, I won't speculate when, there will be super seniority afforded to wages and pensions."
Shanghai's ChiNext stock board has earlier lost almost 7% at one point after major Chinese brokerage Golden Sun excluded it from margin trading by clients.
But the Nasdaq-style index of 464 technology and innovation stocks then rallied together with China's larger indices, ending the day only 1% lower – and still some 175% higher from 6 months ago.
Trading volume in the Shanghai Gold Exchange's main contract held steady, but it was almost overtaken by strong trade in both the free-trade zone and especially the domestic contracts for higher purity 0.9999 gold bars, which fell slightly less in Yuan terms.
"Another fairly sleepy session for Asia in the precious metals," says one trading desk. "Seems to be becoming a bit of a theme."
"Our focus remains on the downside," says a technical analysis of the gold price from Swiss bank and London market maker UBS, pointing to the "key support" at $1170 – the low from 1st May.
"A break below this level would push the metal...bearish."
"The apparent lack of support for gold from the Euro rally," says London market maker HSBC, "may be explained by the impact of weaker oil, thin trading volume, less concern over Greece and positon squaring ahead of Friday's US monthly jobs report."
But rather than looking at Dollar prices, "Euro gold remains the driver," counters the trading desk at Chinese-owned ICBC Standard Bank in London, "as European optimism [is] resulting in further longs liquidating."
Standard Bank's team say "€1049 support [has] broken, with 200-day moving average next at €1030."
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