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Gold Bullion Dead-Flat at €1050 as Euro Falls Amid New ECB Support for Greece, Debt Interest 'Donated' Back to Athens

July 17, 2015
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GOLD BULLION touched new 4-month lows for US investors on Thursday, dipping through $1143 per ounce but holding dead-flat in Euro terms as the single currency fell amid news of fresh support for Greece from its Eurozone creditors.
 
The Dollar rose against most major currencies, but US Treasury bond yields were unchanged, as US Fed chair Janet Yellen continued her semi-annual testimony on monetary policy to politicians in Washington.
 
Last night’s Greek parliamentary vote to accept a third Eurozone bail-out was meantime deemed “satisfactory” by Athens’ currency partners, and debt interest paid by Greece to Eurozone central banks is being ‘donated’ back to Athens through their national governments, the Banque de France said.
 
Presenting today’s “no change” decision on rates and QE to journalists in Frankfurt, European Central Bank president Mario Draghi didn’t mention Greece or Athens once in his 1,350-word introductory statement.
 
But the following Q&A session was however dominated by Greece, with Draghi confirming that his central bank was making extra Emergency Liquidity Assistance loans to Greek banks today.
 
The ECB “acts on the assumption that Greece is and will remain a member of the Euro area,” said Draghi, adding that – contrary to the German government’s position, but in line with the US-based IMF – “It’s uncontroversial that debt relief is necessary.”
 
As the single currency fell again, now halving 2015’s earlier 8.5% rally from 12-year lows against the Dollar, gold bullion priced in Euros stuck tight to the €1050 per ounce level now held for 6 weeks.
 
Meantime in China, premiums above London quotes for bullion on the Shanghai Gold Exchange rose to multi-month highs, reaching $3.30 per ounce for the domestic kilobar contract on heavy volume.
 
The Shanghai bourse’s ‘international’ kilobar contract in contrast – available since last September to traders using Yuan currency held in offshore accounts – again struggled to find any business, with Thursday’s volume equal to just 0.02% of April’s record.
 
“India physical gold is still trading at a discount of around $6-7 per ounce,” said a note from Swiss refiners MKS, “where it has remained for the past 2 weeks or so.”
 
“The fall in the oil price is providing very significant support to major emerging economies,” says French investment and bullion bank Natixis’ chief economist, Patrick Artus, naming amongst others China, India and Turkey – the world’s first, second and fourth largest gold buying nations respectively.
 
The 50% drop in crude oil from 12 months ago, says Artus, comes “at just the right moment to reduce these countries’ external deficits at a time when global trade was weakening.”
 
Shares in the biggest oil companies are meantime so “undervalued” they offer”the highest dividend yields since the financial crisis that began in 2008,” reports Bloomberg, with Royal Dutch Shell’s 6.7% “almost double the average for London’s FTSE-100 stock index.”
 
Currently offering a dividend yield of 2.0%, world No.1 gold miner Barrick (NYSE:ABX) is looking to sell $3 billion of assets to cut its $12.9bn of debt.

Gold Prices Drop $10 to March Lows as US Industry Grows, Fed's Yellen Expects Consumer Boost from Cheap Oil

July 16, 2015
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GOLD PRICES fell together with the Euro single currency on Wednesday, dropping to new 4-month lows for Dollar investors after US data showed a rebound in industrial output and Federal Reserve chair Janet Yellen again signalled her plan to raise interest rates from 0% before year’s end.
 
US industrial production rose at the fastest monthly pace of 2015 so far in June, new data from Fed showed, with capacity utilization rising to 78.4% from May’s 19-month low.
 
“Valuation measures in most asset markets remain notable,” the central bank said separately in its quarterly Monetary Policy Report, and “credit markets have been reflecting some signs of reach-for-yield behavior.”
 
“The US economy,” said chair Yellen – presenting the Report in her semi-annual testimony to Congress, and again saying “economic conditions likely…make it appropriate at some point this year to raise the federal funds rate target” – “might snap back more quickly as the…boost to consumer spending from low oil prices shows through more definitively.”
 
New data Tuesday had shown US retail sales falling unexpectedly in June, despite overall import prices dropping 10% from a year earlier.
 
Despite crude oil falling near January’s 6-year lows, retail gasoline prices in California this week hit 12-month highs after refinery output was hit by strikes, maintenance and repair work.
 
The Dollar pushed the Euro down to 1-week lows of $1.0940, while 10-year US Treasury yields spiked to a 2-day high of 2.42%.
 
Dollar gold prices fell almost $10 per ounce to $1146 – the weakest level since mid-March, and some $15 above last November’s 4.5-year lows.
 
Gold priced in Euros, in contrast, traded around the €1050 level now holding since the current phase of the Greek debt crisis began in early June.
 
“Greece’s debt,” says a leaked memo from the International Monetary Fund made public overnight, “can now only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far.”
 
Eurozone proposals for a third Greek bail-out being debated today by the parliament in Athens – and supported by the formerly anti-austerity Syriza government – actually need “a very dramatic extension” of debt maturities, the IMF memo advises, “with grace periods of, say, 30 years on the entire stock of European debt, including new assistance.”
 
The “breakout today [in gold prices was] likely to the downside,” says a trading note from Chinese-owned ICBC Standard Bank’s London team, adding that the price had been “impressively stable” amid open interest in US Comex futures and options “rising dramatically as [bearish] shorts pile in.”
 
“Gold is out of love,” agrees another London bullion bank in a note, “as investors continue to short the precious metal.
 
“The macro news remains unfriendly to the yellow metal [as] the market continues to price in a Fed rate hike for September 2015.”

Gold Bullion 'Steady', Volatility Sinks as US Data Weaken, Iran Nuclear Deal Sees Oil Hit 3-Month Low

July 15, 2015
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GOLD BULLION held in a tight range in Asian and London trade on Tuesday, extending its lowest volatility since last summer as the Dollar rose despite weak US retail sales data, and crude oil hit new 3-month lows after Iran reached a nuclear proliferation deal with the US and other leading nations.
 
US retail sales showed a surprise 0.3% drop in June from May, despite imports to the US costing one-tenth less from a year before.
 
European stock markets revesed an earlier drop as crude oil prices then recovered following the UN5+1 deal with Tehran, which – after 20 months of talks – sees the US, Russia, China, France, Germany and the UK easing sanctions in what Iranian president Hassan Rouhani called “a good agreement” on monitoring the Middle Eastern state’s nuclear energy program. 
 
Gold bullion priced in Dollars stayed inside a $2.50 range either side of $1156 per ounce.
 
“Gold is steady despite the US Dollar trading stronger and interest rates moving [with] US Treasury yields a bit higher,” says one London bullion desk.
 
Price action is “largely muted,” it goes on, “with light volume and light physical [Asian] buying coming in on the dip to $1150 – just enough to support prices.”
 
The SPDR Gold Trust (NYSEArca:GLD) saw its first inflow in 3 weeks on Tuesday, adding 1.5 tonnes to take the sum gold  backing held at HSBC’s East London facilities to 709 tonnes – a 6-year low when reached last New Year’s Eve.
 
Analysis by BullionVault today showed volatility in Dollar gold prices slowing near its lowest levels since the Western banking crisis exploded in summer 2007. 
Gold priced in Dollars, daily volatility, 1-month average
 
“Any further insight on the direction of Fed policy,” says Swiss investment and bullion bank UBS, looking ahead to US central-bank chief Janet Yellen’s twice-annual testimony to politicians starting Wednesday, “would in turn feed through to gold price action.”
 
“We expect her to once again emphasize that the hiking cycle should be gradual,” says a note from Bank of America-Merrill Lynch, “and to not veer from a strong data-dependent approach to policy.”
 
New data from China today showed money-supply growth in the world’s No.2 economy rising to 11.8% annually in June.
 
Broad social credit – estimating all private-sector lending, including peer-to-peer loans – rose 52% faster in June from May, reckons MarketWatch, even as the Shanghai stock market hit a 30% plunge .
 
“The next global recession will be made by China,” says Morgan Stanley Investment Management’s head of emerging markets Ruchir Sharma, now managing over $25 billion of client funds, speaking to Bloomberg.
 
“Over the next couple of years, China is likely to be the biggest source of vulnerability.”
 
Wednesday’s Asian opening will bring China’s first official Q2 GDP estimate, expected to read 6.8% per year for the slowest annual rise since the Western world’s 2008-2009 financial crisis.
 
“China’s commodity imports for the first half of the year go some way to confirming what is already known,” says Reuters commodity columnist Clyde Russell.
 
“Overall the picture remains one of soft demand,” he says, with iron imports refusing to rise despite record-low world prices, copper imports hurt by the bursting “shadow banking” market for collateralized loans, and much of China’s “fairly positive” crude oil imports in fact “flowing into strategic storage stockpiles.”

Gold Prices Hit 'Knee-Jerk' Drop After Greek Debt Deal, But Iran's Nuclear Talks 'Could Delay US Fed Rate Hike'

July 14, 2015
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GOLD PRICES fell in London on Monday, coming within $5 per ounce last week’s 4-month lows as world stock markets rose – but commodities dropped with major-government bond prices – following the overnight deal between Athens and its Eurozone creditors over extending Greece’s financial bail-out.
 
Shanghai’s main stock index closed almost 3% higher, continuing China’s recovery from the last month’s 30% sell off after regulators banned large investors from selling their shares.
 
With the European Central Bank meeting to set monetary policy on Thursday this week, the Euro meantime dropped almost 2 cents on the FX market, dipping beneath $1.10 – an 11-year low when first hit at the start of this latest Greek crisis in January.
 
That helped the gold price in Euros recover an early 0.7% drop near last week’s new 5-month lows, rallying back to €1044 per ounce.
 
“Gold dropped in knee-jerk fashion after the Euro summit reached a deal on Greece this morning,” says a bullion note from Swiss bank and London market maker UBS.
 
“Given the relative lack of significant safe-haven flows to begin with, the downside should be contained.”
 
What’s more, UBS adds, bearish speculators betting against gold prices “[are] likely going to be constrained by the fact that gold short positioning is at all-time highs.”
 
Latest data show hedge funds and other non-industry players in US gold futures and options growing their bearish bets as a group by 12% last week to a new all-time high, some 3.6 times the size of the last two decades’ average.
 
Net net, however, speculators remained bullish overall, but by the smallest margin since the gold price crash of 2013.
 
“Clearly,” says a note from the commodity analysts at Commerzbank, “speculative market participants are more convinced than ever that Greece will be ‘rescued’.
 
“In our opinion, the growing pessimism displayed by money managers will prevent precious metal prices from making any kind of noticeable recovery in the near future.”
 
Looking longer-term, “Gold’s price has remained extraordinarily stable for 2 years now,” says US investment bank and London market maker Morgan Stanley, “trading in a tight $1100-1300 per ounce band.
 
While gold prices have been “buoyed perhaps by Euro-centric anxiety (Greece, Russia),” Morgan Stanley says, the metal’s firm range has “also largely [been] ignoring the steady lift of the US Dollar” on the currency market.
 
More than 6.5 years after the Federal Reserve first cut overnight Dollar interest rates to 0%, US Fed chair Janet Yellen – who testifies on monetary policy later this week to Congress – said Friday she expects “it will be appropriate at some point later this year to take the first step to raise the federal funds rate and thus begin normalizing monetary policy.
 
“But I want to emphasize that the course of the economy and inflation remains highly uncertain, and unanticipated developments could delay or accelerate this first step.”
 
Last weekend’s continued talks between Iran and the UN‘s five permanent members plus Germany could “suppress crude prices, adding to deflationary pressures in many economies,” notes Mitsubishi analyst Jonathan Butler in his weekly report on Monday.
 
But while “removing the need for an inflation hedge,” any deal which further dents crude oil “would also risk inflation [being] too low for the US to raise interest rates any time soon…relatively benign for gold.”

Gold Price Hits 3rd Lowest Weekly Close Since 2010 as Greek Deal Looms, China Stocks Rally Again

July 11, 2015
Latest News
GOLD PRICES fell in London on Friday, nearing a 0.7% loss for the week in Dollars and falling harder against the Euro as China’s stock market extended its bounce from July’s earlier plunge, and European shares rose on optimism a Greek bail-out deal  can be struck at the weekend’s key summits.
 
Falling to €1035 per ounce as the single currency rose on the FX market, the gold price in Euros broke below its tight €20 range of the last 6 weeks.
 
Dollar gold prices meantime recorded their 3rd lowest weekly close of the last 5 years at the benchmark London auction, fixing at $1162.40.
 
“Euro gold under pressure given the optimism over a deal,” notes the trading desk at ICBC Standard Bank in London.
 
“If the Greek proposals were to be rejected,” reckons a note from commodity analysts at Germany’s Commerzbank, “short-term turmoil on the financial markets and a rising gold price would be likely at the beginning of [next] week.”
 
But “whether any of the present instability in China or Europe could or should support gold prices,” says Mitsui Global Precious Metals, “remains a moot point.”
 
Looking at the key Asian markets, Mitsui adds that “physical demand is somewhat brisker than the premiums might suggest, but existing stockpiles in the Far East continue to feed demand with ease.”
 
Typically priced at a premium to London wholesale bullion quotes, gold in India – the world’s largest consumer nation until overtaken by China in 2013 – widened to the equivalent of an $8 discount per ounce on Friday according to local traders.
 
Shanghai gold premiums meantime recovered to 75 cents per ounce on China’s main domestic contract, but were wildly volatile for both 100-gram and kilobar contracts on the city’s international gold market.
 
Briefly overtaking the main domestic contract’s trading volume in April, the Shanghai Gold Exchange’s international kilobar contract today saw the lowest turnover since Tuesday recorded the first zero-day since it launched last September.
 
The SGE today launched its new “Shanghai-Hong Kong Link“, enabling trading in the offshore city state to trade directly onto China’s only legally-approved bullion market, cutting their set-up costs.
 
“The Chinese would rather buy cheap blue chips in the stock market,” Reuters earlier quoted Dick Poon at German refiner Heraeus’ Hong Kong office, looking at the second 5% equity bounce in two days.
 
“I don’t think they have any intention to buy gold for the time being.”

Gold Bullion 'Caught in China Storm', Rallies with Equities as Eurozone Splits Over Cutting Greek Debt

July 10, 2015
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GOLD BULLION prices rose Thursday against all major currencies, recovering all but $1 of the week’s earlier $20 drop per ounce against the US Dollar as world stock markets gained following a hard bounce in China’s main equity indices.
 
With trading still halted in around half the shares listed on the Shanghai and Shenzen stock markets, the CSI300 index of the biggest companies closed 6.7% higher after the last 3 week’s near one-third collapse.
 
Weaker Eurozone government bonds rallied, while US Treasuries retreated with German Bunds – pushing US and German yields higher – after Athens formally applied yesterday to the European Stability Mechanism for a third bail-out program following last weekend’s decisive referendum vote against accepting the lenders’ previous offer.
 
A “hair cut” on Greece’s outstanding debts is “out of the question” German chancellor Angela Merkel said today.
 
But any “realistic proposal from Greece will have to be matched by an equally realistic proposal on debt sustainability from the creditors,” countered European Council president Donald Tusk, echoing comments from fellow creditor the International Monetary Fund’s managing director, Christine Lagarde.
 
Tusk is set to chair Sunday’s summit of Eurozone leaders – now expected to end with Grexit from the single currency if a deal can’t be reached.
 
“Euro gold is tightly holding on to the same €1040-1060 range for over 1 month!” says a trading note from the bullion desk at Chinese-owned London dealers ICBC Standard Bank.
 
Trading volume in Shanghai’s main domestic gold contract today halved from Wednesday’s 4-month high, but prices closed the session at a 50 cent premium over London prices versus Wednesday’s $1.20 discount per ounce.
 
Shanghai contracts for high-grade kilo bars landed in China – the preferred form of gold bullion for China’s private investors – rose $1.30 above London prices today on solid volume.
 
The city’s “international” contract for 0.9999 fine kilobars, in contrast – trading metal held in Shanghai’s free-trade zone using Yuan held in offshore accounts – closed Thursday at a discount to world spot prices of nearly $3.70 per ounce, again seeing very weak volume.
 
“Gold [has been] caught in the storm as investors look for cash to pay margin calls elsewhere,” says one London bullion bank in a note, adding that it still sees a strong chance of higher prices “from a re-allocation of funds towards gold in China.
 
“A recent surge in Shanghai Gold Exchange activity and physical deliveries is pointing to renewed demand” in the world’s second largest economy, the note adds.
 
But “It is much too early to say [for sure], and our own flow from Far-East is not pointing to a broad based activity – certainly not at a large investors’ level.”
 
“China is showing what a scramble for cash looks like,” says the Financial Times, adding that “the obvious place to look for liquidity was in the country’s commodity futures markets.”
 
“Rout in precious metals,” says analysis from Dutch bank ABN Amro, claiming that “gold is not living up to its safe haven status again.”
 
“There is a risk,” adds Swiss investment and bullion bank UBS, “that gold’s lack of ‘traditional’ safe haven response could disappoint some participants and weigh further on market sentiment.”
 
US options pricing points to “bearish” sentiment amongst Western speculators, says another London bullion bank in a trading comment, noting that “Puts [are] better bid…trading at more than 1% premiums over calls.”

Gold Price Bounces on NYSE Trading Halt After Fresh China Stock Slump Sees Shanghai Gold Trade at Discount

July 9, 2015
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GOLD PRICES bounced hard from 4-month lows in late London trade Wednesday as the latest rout in Chinese equities – plus fresh proposals from Euro-bankrupt Athens to Greece’s creditors – was followed by a halt to share trading on the New York Stock Exchange due to “technical issues”.
 
With the S&P 500 index already down 1.3% on the day, “This is the worst I’ve seen since the Nasdaq blackout” of August 2013, one analyst told CNBC.
 
Dollar gold prices meantime bounced to $1163 per ounce, recovering $15 of the $20 dropped to new 4-month lows so far this week.
 
Trading on Shanghai’s state-approved gold exchange had earlier jumped, hitting the heaviest volume since early February in China’s main domestic contract, as both the Shanghai and Hong Kong stock markets sank by more than 5%.
 
Gold prices still fell in Yuan terms however, hitting the lowest daily close at the SGE since December, with the equivalent Dollar price reaching a $1.20 per ounce discount to comparable quotes in London on Wednesday morning.
 
“Government counter measures to arrest the [stockmarket] slump have also failed to work so far,” notes Chinese-owned investment bank ICBC Standard Bank’s London office.
 
“Commodity markets are likely to remain volatile,” ICBC Standard Bank adds, “but with the Chinese government looking likely to overcompensate, an aggressive rally may well be next.”
 
“Perhaps gold has not been a safe-haven,” says analysis from Australia’s Macquarie investment bank, “because investors do not need a safe-haven” despite the Greek and now Chinese crises.
 
China share prices remain 15% higher for 2015 so far, Macquarie explains, and “global equity markets haven’t shown anywhere near as much volatility.”
 
“So far,” agrees bullion bank HSBC’s analyst James Steel, “China equity losses have not resulted in more investor funds being channeled into gold.
 
But “the combination of little ‘safehaven’ demand [plus] weak physical emerging-market purchases is clearly bearish for bullion.”
 
China’s equity market has seen 52 million new brokerage accounts opened so far in 2015.
 
Calling the last month’s 35% crash an “irrational drop”, regulators today banned any investor holding more than 5% of a listed stock from selling any of their shares for the next 6 months, extending an increasingly desperate raft of measures aimed at stemming the meltdown.
 
“The ban also applies to senior company executives and board members,” reports the Financial Times from Shanghai, “regardless of the size of their stakes.
 
“The regulator said it would ‘deal sternly’ with violators.”
 
Greek prime minister Alexis Tsipras meantime spoke to the European Parliament in Brussels on Wednesday, urging support and unity amongst the Eurozone as details of Athens latest and perhaps final proposals to its creditor partner states were revealed.
 
Asking for a new 3-year bail out program, Greece’s “radical left” Syriza government says it will implement tax and pension reforms starting next week, provided that talks are at least scheduled to discuss reducing Athens outstanding debts.
 
Wednesday’s recovery in the Euro, rising near last week’s closing value on the FX market, kept the gold price for single currency investors nailed to €1050 per ounce – a 16-month high when first reached in January, around which it has now traded very tightly since the start of June.

Gold Bullion 'Still Valid Investment' But Price Sinks to 4-Month Low as Greece Isolated by Euro 'Partners', Silver Hits New 2015 Low

July 8, 2015
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GOLD BULLION prices sank against a surging US Dollar on Tuesday in London, dropping 1.1% inside two hours as New York’s stock indices followed Europe and Asia lower amid fresh wrangling over Greece’s debt crisis, plus a fresh sell-off in China’s equity markets.
 
With the Euro currency dropping to 5-week lows against the Dollar after better-than-expected US job openings data for May, the price of gold bullion for single currency investors retreated towards last week’s finishing level at €1050 per ounce.
 
Gold bullion in Dollar, in contrast, sank through last week’s 4-month lows at $1158 to trade down to $1152 – the lowest level since mid-March.
 
Silver meantime sank more than 5% against the Dollar, dropping to new 2015 lows at $14.90 per ounce.
 
“In light of [Monday’s crash in commodity prices], the precious metal complex, particularly gold and silver, [had been] star performers,” noted one London bullion bank’s dealing desk.
 
“Gold’s deterioration,” reckons a note from London bullion market maker and benchmark price participant Barclays, “is evidence of the market discounting wider contagion risk from a Greek default, and increasing certainty of a US rate hike this year.”
 
New data delayed by Friday’s 4th of July holiday yesterday showed large speculative traders in US gold futures and options growing their bearish bets last week to the greatest level since the all-time record of early July 2013, back when the metal’s price began steadying after its worst calendar-quarter drop on record.
 
Speculators meantime cut their bullish bets by more than 5% from the previous week’s 10-year high, leaving the so-called “net speculative long” position at its weakest since November’s new 5-year lows in the gold price.
 
Short betting against silver prices last week hit another new all-time high, the US regulators’ data show.
 
Going into Tuesday’s meeting of new Greek finance minister Euclid Tsakalotos with his Eurozone peers, the finance minister of 2009 Euro entrant Slovakia called Greek debt reduction a “red line” his country will not accept crossing.
 
Prime minister Alex Stubb of founder member Finland – itself “strangled by the Euro” according to many economists noting that GDP remains 5% below pre-crisis levels – told reporters Greece benefited from debt relief in 2011 and 2012, and the current meeting “[is] not in the business of restructuring debt.”
 
ECB board member Ilmars Rimsevics, representing the Euro system’s newest central bank member Latvia, said “The Greek nation has been brave and has voted itself out of the Eurozone.”
 
A day after the European Central Bank demanded more collateral from Greek banks in return for the Emergency Liquidity Assistance already lent, “Provision of ELA at overly generous conditions could increase the risk of moral hazard,” the ECB said in an updated document on its site, spotted by Bloomberg.
 
“The objective of ELA is to support solvent credit institutions facing temporary liquidity problems. It is not a monetary-policy instrument…[and it must not] breach the monetary financing prohibition” which blocks central banks from funding national government deficits under the terms of the Euro treaties.
 
“We have a great friendship with Syriza, but luckily, Spain is not Greece,” the leader of Spain’s left-wing opposition Podemos party meantime told national radio.
 
Defending his 20% allocation to gold bullion, “We believe that gold continues to be part of a long-term wealth creation and maintenance strategy,” Bloomberg quotes Michael Cuggino of San Francisco’s $4.6 billion Permanent Portfolio Family of Funds Inc.
 
“The rationale for an allocation to gold remains strong,” agrees BlackRock Commodities Income Investment Trust manager Thomas Holl, speaking to the Financial Times‘ professionals magazine, FT Adviser.
 
“Its role as a hedge against financial market instability, currency weakness and the risk of inflation, continues to be valid.”

Gold Price 'Does Nothing' on Greece's 'Resounding No' Referendum Vote, Selling Hits 'Logical Reaction'

July 7, 2015
Latest News
GOLD PRICES failed to hold an early 1.7% spike against the Euro in London trade Monday, after the Greek referendum surprised pundits and politicians with a resounding “No” to the austerity and repayment demands of Athens’ international and Eurozone creditors.
 
Priced in Dollars, gold moved in a $10 range around $1170 per ounce.
 
Euro gold prices spiked to €1066 as the 19-nation currency sank at the start of Asian trade following Sunday’s Greek referendum, but then slipped back to last week’s level of €1050 before edging 0.5% higher.
 
European stock markets meantime lost 1.5%, but US shares slipped only 0.5% at Monday’s open as major-economy government bond prices jumped.
 
US crude oil contracts sank almost 5% per barrel to trade below $55 for the first time in 3 months.
 
“[Sunday’s] unexpectedly resolute ‘No’ vote has increased the chances of Greece leaving the Eurozone,” says today’s commodities note from German investment and commercial bank Commerzbank. 
 
“Yet there has been virtually no reaction from the gold price.”
 
However the politics now unfolds, reckons US brokerage INTL FCStone in a note, “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.”
 
But “Gold’s ‘safe haven’ appeal is clearly out the window,” counters China-owned bullion and investment bank ICBC Standard Bank, “as any logical reaction to [gold’s overnight] rally continues to run into scale up selling.
 
“Selling interest brought prices right back to the €1050 anchor.”
 
Looking at the political and puntits’ reaction to the Greek referendum, “The resounding ‘No’ vote is incompatible with opinion poll findings that most Greeks want to stay in the Euro,” reckons former UBS economist George Magnus.
 
Congratulations for the 61-to-39% victory for ‘Oxi’ today came from the left-wing leaders of Venezuela, Cuba and Bolivia, as well as from recent debt-defaulter Argentina.
 
Within Greece, claimed German MEP Manfred Weber, it was “worrying that it’s mainly radical parties (far-left & far-right) that are celebrating [this] outcome.”
 
“Democracy matters more than any currency arrangement,” wrote Keynesian US professor Paul Krugman on his New York Times blog.
 
“We are in a difficult situation,” said Martin Schulz, president of the European Parliament – and “chief bully boy” according to UK anti-Europe MEP Nigel Farage – because “eighteen other states of the Eurozone agreed about the proposals to which the Greek people said ‘no’. 
 
“Democratic governments and parliaments in other countries had another view, a different view.”
 
Spain’s economy minister Luis de Guindos said Athens had the right to ask for a 3rd bail-out from its Eurozone partners – a view stated in March – while fellow bailed-out Euro member Ireland had “always [felt] debt reprofiling would be part of [a Greek] agreement,” said Dublin’s minister for European Affairs Dara Murphy, contradicting what Irish taoiseach Enda Kenny said only a fortnight ago. 
 
“Germany is the country that has never repaid its debts,” says French economic historian Thomas Piketty, interviewed by Die Welt and pointing to Berlin’s own debt forgiveness enjoyed after the first and second world wars.
 
“[Germany] has no standing to lecture other nations.”
 
Greek finance minister Yanis Varoufakis meantime surprised analysts early Monday by resigning his post, despite the referendum win for Syriza’s view – a move apparently aimed at placating Athens’ creditors so that prime minister Alexis Tsipras can begin renegotiations in Brussels on Tuesday.
 
“Amidst all this,” notes Japanese conglomerate Mitsubishi’s analyst Jonathan Butler, “gold has done very little [and] has performed disappointingly as the Euro clawed back its initial losses against the Dollar.
 
“[But] volatility in gold could increase from the currently rather subdued level as the crisis drags on.”
 
Stock markets in China meantime soared 8% and then fell back to cloose only 2.5% higher on Monday after Beijing moved to stem the last month’s near one-third collapse in equity prices by banning any sales below a certain points-level, forcing the creation of a $19 billion “stabilization fund” financed by 21 major brokerages, suspending all new share IPO flotations, and promising “liquidity support” to financial intermediaries.

Gold Regains Euro Loss as Greece 'Set to Vote Yes' Say Bookmakers, India's Demand to Buy Hits Summer Lull

July 3, 2015
Latest News
BUY GOLD prices in London’s wholesale market edged higher on Friday, as world stock markets fell again ahead of this weekend’s Greek referendum, asking voters whether they accept the terms of a bail-out which Athens’ creditors now say is off the table.
 
With the New York gold futures market closed for Independence Day, prices to buy gold with Dollars touched $1170 per ounce, regaining two-thirds of the week’s earlier 1.5% drop.
 
As a snap opinion poll showed Greek voters split almost 50-50 over Sunday’s ballot, prices to buy gold with Euros rose back to last Friday’s closing level at €1054 per ounce.
 
“Bookmakers odds might be a better guide to political outcomes than opinion polls,” writes investment bank ICBC Standard Bank’s FX strategist Steven Barrow, citing last year’s Scottish independence referendum and UK elections this May.
 
“Scouring some of the leading bookmakers,” “it looks like the probability of a ‘yes’ outcome is put in the 60% region while the chances of a ‘no’ vote are put at around 40%.
 
Greece’s banks and financial markets remained closed Friday amid capital controls restricting depositors to €60 withdrawals per day from ATMs, with reports spreading that cashpoints are already empty.
 
“Referendums are in fashion these days,” says one London bullion market-making bank’s note, pointing to the Scottish as well as Swiss gold referendum of late 2014.
 
“Unlike those, no one in the investment world really has much time (or willingness) to position ahead of [Sunday’s Greek] result, especially in a week shortened by the US Independence Day.”
 
Shanghai’s stock market meantime sank by more than 5% yet again on Friday, extending the last 3 weeks’ slump to 30% and prompting the China Securities Regulatory Commission to say it’s investigating short sellers and market manipulation, “based on reports of unusual movements” in  stock and derivatives prices.
 
“Whether there is a ‘Yes’ or a ‘No, an agreement is in the offing,” said Athens’ finance minister Yaris Varoufakis to Irish broadcaster RTE today, repeating a claim he made to the BBC and also Bloomberg on Thursday that “a deal is more or less done.”
 
On the contrary, said European Commission president Jean-Claude Juncker – who said last week he felt “betrayed” by Athens’ negotiators – because “If the Greeks vote ‘no’, the Greek position is dramatically weakened.”
 
Seasonally weak demand to buy gold in major consumer nation India, meantime, has driven local prices as far as $15 per ounce below London benchmarks, Reuters reports.
 
Typically quoted at a premium to London, retail prices to buy gold in India already slipped $1 below in June, but the last two weeks’ price drop “failed to lure customers,” the news-wire quotes Bachhraj Bamalwa, director at the All India Gems & Jewellery Trade Federation.
 
Latest Swiss gold export data, says consultancy Metals Focus in a new report, “ties in well with feedback from our field trips, that gold demand in India [has] eased.”
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