Sunday, June 28, 2015

Gold surges on haven demand as Greece risks exit from eurozone

Gold surges on haven demand as Greece risks exit from eurozone

[ATHENS] Gold surged with silver as Greece shut banks and imposed capital controls, boosting demand for haven assets amid concern the country's euro membership is in jeopardy.
Bullion for immediate delivery rallied as much as 1.1 per cent to US$1,188.23 an ounce and was at US$1,184.02 at 7:30 am in Singapore, according to Bloomberg generic pricing. Gold for August delivery jumped 1.2 per cent to US$1,187.60 on the Comex.
The euro sank against the US dollar after Greece's government moved the nation a step closer to leaving the currency bloc. Optimism that Greece and its creditors would reach a deal vanished after midnight Friday, when Prime Minister Alexis Tsipras surprised counterparts by calling for a July 5 referendum on austerity measures demanded by creditors. Tuesday marks the expiry of Greece's bailout package as well as the deadline for a payment to the International Monetary Fund.
"The main worry as Monday trading begins is the potential contagion to other eurozone countries and also the future of the euro," Ole Hansen, head of commodity strategy at Copenhagen-based Saxo Bank A/S, said in an e-mail before the start of trade on Monday. "Gold has an opportunity under these circumstances to reassert its role as a safe haven and we should see the metal being bought." European officials discussed quarantining Greece from the rest of the currency bloc, while keeping it from spinning out of the euro's orbit. While the country accounts for less than 2 per cent of the eurozone's output, its exit would set a precedent for other nations to reconsider membership.
Gold is little changed this year as traders focus on when the US Federal Reserve's first interest-rate increase since 2006 will happen. Higher borrowing costs curb bullion's allure because it doesn't pay interest or give returns like other assets such as bonds and equities.
The euro tumbled 1.6 per cent to US$1.0987. The Bloomberg Dollar Spot Index, which tracks the US currency against 10 major peers, climbed 0.5 per cent.
The "upside in gold will be damped by a higher dollar," Georgette Boele, a strategist at ABN Amro Bank NV in Amsterdam, said by e-mail on Friday. "We are optimistic on the US economy and therefore on rate hikes." Silver for immediate delivery climbed as much as 1.7 per cent to US$16.0741 an ounce, and was at US$15.9635. Platinum and palladium fell.
BLOOMBERG

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