Gold News

Grexit Rumors Pop Gold Prices Higher as Eurozone Finance Chiefs Meet Again, Anti-Greek Bloc 'Hardening'

GOLD PRICES popped $10 per ounce Friday lunchtime in London, cutting the week's earlier 2.6% drop in half as European stock markets fell – and the Euro currency neared 3-week lows – amid new expectations that Greece will leave the 20-nation currency zone.
 
Silver rallied with gold prices as rumors a 'Grexit' is growing more likely, but held 5% down for the week beneath $16.50 per ounce.
 
Crude oil recovered to $51 per barrel from Thursday's sharp losses following news that US stockpiles are the largest for this time of year in at least 80 years.
 
Gold prices held above $1210 per ounce in US Dollar terms as London trading neared the weekend.
 
For Euro investors, the price moved above €1070, down some 0.6% for the week.
 
"The European Central Bank (ECB) is preparing for a Greek exit from the monetary union," reported German news magazine Spiegel this morning.
 
"I think [the other Eurozone states] have now reached a point," added Malta's finance minister to the island's media, "where they will tell Greece 'If you really want to leave, leave'."
 
"I think they mean it, because Germany, the Netherlands and others will be hard."
 
Finance ministers from the world's largest single currency zone were due to meet on Friday for the third time in 10 days to discuss Greece's request for a 6-month extension to its current bail-out loans – a request immediately rejected by the German finance ministry.
 
"Markets remain alert," says Spain's Expansion, "to any news leak or rumor about the course of negotiations."
 
A spokeswoman for German chancellor Merkel today said Berlin's finance chief, Wolfgang Schäuble is doing an "excellent job in this crisis and in the negotiations with Greece."
 
"Support for the yellow metal," says Swiss refinery group MKS, "has been underwhelming throughout the Greek bail-out negotiations and the market looks to have forgotten about Russia/Ukraine."
 
"Gold finds itself under unexpected pressure in a market environment fraught with uncertainties," says daily price comment from Germany's Commerzbank, noting Friday's earlier dip back below $1200 for the second time in two days.
 
"Signals remain biased to further downside," reckons a technical analysis from bullion bank Scotia Mocatta, "and we focus on $1200 as a level of near-term support."
 
With the Eurogroup meeting due to start mid-afternoon Friday in Brussels, Eurozone stock indices slipped from 7-year highs, while Greek bond yields rose and the single currency dropped below $1.13 on the FX market.
 
But "investors' new [stockmarket] bullishness is strongly focused on the Eurozone," said Bank of America Merrill Lynch's latest survey of fund managers this week. Because last month's announcement of Eurozone QE means "the ECB has successfully vanquished global deflation fears and induced the return of reflation trades."
 
A net 79% of BAML's respondents now think bonds are over-valued, while 40% expect the gold price to be higher in 12 months' time.
 
"Last month," says the report, "bears on the precious metal still outnumbered bulls."
 
US stock markets, meantime, are now more highly priced in terms of long-term corporate earnings than they were at the pre-crisis 2007 top, according to Yale professor and author Robert Shiller.

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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