Gold opens higher with ongoing Greek uncertainty

In the Lead: “Welcome! You've Got Bail (or not)!”

The on-going saga of the Greek bailout that is or is not a bailout remained the principal attraction for the financial media’s attention this morning. Sources say that Greek bonds will continue to be accepted as collateral for money market operations “unless all the major ratings agencies commence using the “default” word. Several banks in the Eurozone were set to meet tomorrow to discuss the impasse regarding the restructuring of Greek sovereign debt that is presently at hand.

Still, the French-originated “roadmap” that was proposed last week, was the most likely one to remain at the core of any agreement to possibly be reached this week by the affected parties. Meanwhile, Moody’s rating agency has warned that said banks’ rolling over of Greek debt into 30-year would in fact prompt it to downgrade Greece to “selective default.” Thus, the current situation is taking on an overtone of basically turning into a war of semantics between the bankers and the ratings agencies.

Gold prices finally gained sufficient ground after three down sessions to recapture the $1,500.00 mark (just barely) as the new, abbreviated trading week got underway in New York this morning. The yellow metal’s overnight gains had been achieved on account of the US dollar touching three-week lows against the euro and due to continuing uncertainties surrounding the Greek debt situation. As well, some bargain hunting had manifested in the market following the contact with six-week low prices that gold had achieved last week following some sharp sell-offs.

Spot bullion dealing opened Tuesday’s trading session with a gain of $7.80 per ounce in gold. The bid-side indication for the yellow metal was $1,504.10 per ounce. Friday’s Elliott Wave short-term update allows for gold to climb somewhat above $1,515.00 prior to commencing a third wave lower towards the $1,400.00 target. Silver climbed 60 cents to open at $34.75 per ounce. Platinum and palladium gained ground as well, with the former rising by $3 to the $1,723.00 mark and the latter opening higher by the same amount, at the $761.00 per ounce level.

No change was noted in rhodium at $1,925.00 per troy ounce. Automotive news this morning was positive for the noble metals’ complex; GM just reported its highest ever sales activity in China for the first half of this year. The auto giant tallied sales of 1.27 million vehicles in that country for the reporting period.

Friday’s automotive news was, however, not-so-hot for PGM speculators; the US markets tallied only an annualized 11.4 million vehicular sales level as opposed to the anticipated 12 million annualized units.

The CFTC reported that fund managers and other specs have dramatically (by 18%) cut their net-long exposure in the futures market as of the end of the latest reporting period (ended June 28). The July 1 release of the CFTC’s market snapshot analysis revealed that net speculative length in gold fell by a whopping 142.2. tonnes, highlighting the potential for further bouts of liquidation in the metal.

Technical analysis offered by long-time Kitco commentaries’ contributor Merv Burak notes the unfolding of a head-and-shoulders pattern in gold; one that anticipates a direction that targets the $1,400.00 value zone. Veteran market observer Ned Schmidt continues to peg “far value” in gold at the mid-$800 zone.

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