Gold recovers from 1-month low on Greece and diverging policies in European, US central banks
As
investors assessed Greece’s political crisis, including the
possible exit from the euro zone, with
diverging central-bank policies in the U.S and Europe, the gold extended its gains from a one-month low, as Bloomberg reports.
Gold rose for the first time in four
months in December as slowing economic growth outside the U.S
prompts governments to boost incentive. Silver,
platinum and palladium also rose.
In Singapore, bullion for immediate delivery rose as much as 0.8 percent to $1,197.97 an ounce, and traded at $1,195.79 at 2:31 p.m., reversing an earlier loss of 0.9 percent.
On the Comex division of the New York Mercantile Exchange, gold futures
for February delivery tacked on $9.40, or 0.79%, to trade at $1,195.60 a
troy ounce during European morning hours, after hitting a daily peak of
$1,197.60.
The precious metal declined to $1,168.34 on Jan. 2, the lowest level since Dec. 1, before rallying to end 0.5 percent higher as concern that Greece may exit the currency area boosted haven demand.
On January 2 Greek Prime Minister Antonis Samaras said that victory for the main opposition Syriza party in the Jan. 25 elections would cause default and the country’s exit from the 19-member euro region, sending the common currency to the weakest since March 2006.
“Political instability in Greece and expectations for
quantitative easing in Europe combine to weaken the euro against
the dollar,” said Lv Jie, an analyst at Cinda Futures Co. in
Hangzhou, China, cited by Bloomberg.
“The weaker euro should pressure precious metals lower but there may be an element of safety.”
Oil prices continued to tumble on Monday to hit the lowest level in more
than five years, as investors piled on to their short positions in
anticipation of lower prices amid lingering concerns over a growing
supply glut.
London-traded Brent prices declined 91 cents, or 1.6%, to $55.52 a barrel, while Nymex oil dropped 84 cents, or 1.59%, to end at $51.85, a level not seen since May 2009.
The US dollar index, which measures the greenback against a basket of six major currencies, advanced 0.21% to nine-year peaks of 91.67, according to Investing.com.
Gold priced in euros climbed today to the highest level
since September 2013, after advancing 12 percent last year. Der
Spiegel magazine reported German Chancellor Angela Merkel is
ready to accept a Greek exit as European policy makers strive to
fend off a return of the region’s debt crisis that began in
Greece in 2009.
Gold posted the first back-to-back annual decline last year
since 2000 as the Federal Reserve ended stimulus in October and
moved closer to raising its key rate.
European Central Bank President Mario Draghi said last week that he can’t rule out deflation in the region, boosting the prospects for large-scale government-bond buying.
Assets in the SPDR Gold Trust, the largest exchange-traded product backed by bullion, were unchanged on Jan. 2 at the lowest since September 2008.
Regarding other precious metals, silver for immediate delivery increased as much as 2.2 percent to $16.0855 an ounce and traded at $16.0542. The metal retreated 19 percent last year after a 36 percent plunge in 2013.
Spot platinum rose 1 percent to $1,214 an ounce. Prices
last year posted a back-to-back annual decline for the first
time since 1997.
Palladium gained 0.7 percent to $800.95 an ounce, rebounding from five straight daily losses.
