Greek uncertainty could still lend support to gold, says INTL FCStone. Barclays sticks to the opposite
Analysts at INTL FCStone consider that the yellow metal could still gain some support from the uncertainty in Greece in the wake of the referendum at which Greeks rejected a measure on austerity.
However, analysts at Barclays consider the traditional safe-haven will not benefit from it.
“It is quite obvious that the situation is still very fluid and bears watching, but whatever the case, we think that the short-term uncertainty generated by the Greek vote will likely benefit gold and suspect that we could see more appreciation over the next few days,” he says Edward Meir, commodities consultant at INTL FCStone.
“However, we suspect that the precious metal will have trouble sustaining its gains, as the negotiations with the Greeks will most likely resume, holding out the possibility of a deal. In the meantime, lower oil prices and a stronger dollar should keep gold’s advance somewhat in check.”
In the meantime, Barclays sticks to another point of view.
The market has assessed that the risk of contagion from a Greek default is limited, according to Barclays.
The dominant question for gold this year in the Federal Reserve rate hike, "which would signal an end to seven years of accommodative
monetary policy and a movement towards assets with higher yields."
"From this perspective, the gold price has been trading as a proxy for the market’s views regarding the timing and likelihood of a rate hike, with dovish signals by the Fed or weak U.S. economic data sending prices upwards, while hawkish statements and strong U.S. data bring prices downwards. Given the continued robust results for the U.S. economy, gold has come under pressure from the impending rate hike, with Greece’s situation not yet severe enough for the broader global economy to warrant safe-haven demand and higher prices.”
