Precious metals jostled by currencies

Precious metals have been relatively volatile throughout the day, but ultimately settling higher for the day bringing an end to a downward trend over the last few days. The U.S. dollar was down earlier in the day but rallied through the afternoon. There was also some technical maneuverings ahead of a change in futures contracts. Eurozone fears still continue to fester as an EU summit voiced support for Greece to remain in the eurozone, but not offering anything substantial in terms of a plan to make that happen.

Eurozone citizens, by and large, are still supportive of Greece remaining in the eurozone despite the looming fear that they may be forced to exit. Support for remaining in the eurozone is strongest in Greece and lowest in Germany and Italy. However, support is still well above 50% for Greece to remain in the eurozone. According to John Wright, “Regardless of the turmoil and the debate that’s going on in these crucial countries, it would seem that for the time being, people want to stick with the euro… Maybe it’s an issue of ‘if one goes down, we all go down together’, but nevertheless, given the options, the public in these crucial countries seem to be on side. People aren’t willing to abandon it – not yet.” Meanwhile, the Syriza party continues to build momentum ahead of Greek elections. The Syriza party is anti-austerity and headed by Alexis Tsipras.

Despite the upheaval in Europe the United States’ economy continues to push forward. The debt problems in Europe and China could start impacting American factory data pretty quickly, with the Purchasing Managers Index falling from 56.0 in April to 53.9 this month. Paul Edelstein said, “We are growing at moderate pace of two to two-and-a-quarter percent, but we have some headwinds that are starting to assert themselves, particularly coming from Europe.”

At 5:00 p.m. (EDT) – the APMEX Precious Metals spot prices were:

  • Gold – $1,560.20 – Up $10.30.
  • Silver – $28.36 – Up $0.76.
  • Platinum – $1,421.60 – Up $5.50.
  • Palladium – $588.40 – Down $4.70.
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Eurozone fears permeate the precious metals market

Precious metals have remained relatively steady in overnight trading. Physical demand and better than expected German data helped maintain prices during overnight trading, but there continues to be concern over Greece’s role and whether or not it will stay in the euro that adds to the volatile currency market. Marex Spectron said, “When German GDP came in at 0.5 percent, a lot higher than expected, the subsequent rally in the euro gave rise to a quick 10-dollar short covering rally in gold.” However Gold’s rebound is viewed as a likely scenario as Pradeep Unni said, “(Gold’s) safe haven status has been tarnished… It will wobble on the euro’s weakness, but in a very short term, bargain hunting and pent-up demand will emerge taking it higher.”

The push for austerity in Greece remains in place regardless of the pleas from Alexis Tsipras, who boycotted a bargaining meeting yesterday in support of his views. The talk of Greece leaving the euro is not viewed as a realistic option. However, the failure of the Greek government to form a unity government after its most recent elections continues to adversely affect European markets. Marchel Alexandrovich said, “The euro breakup story is gathering steam again… If Greece were to ever exit the euro, no amount of reassuring comments will convince investors that other countries won’t soon follow.”

Francois Hollande is to be sworn in as French President later today. Once sworn in, he is expected to fly to Germany to meet with Chancellor Merkel for the first time. The meeting will be closely monitored due to their disparate views and Merkel’s very public support of Hollande’s challenger Nicolas Sarkozy. Carsten Brzeski said, “In our view, what currently looks like a clash between growth-fanatics and austerity-fetishists will eventually end in a good European compromise with something for everyone: The fiscal compact and the medium-term goal of balanced budgets should remain intact, but complemented by a new growth compact with European funds and initiatives.” Erwin Grandinger said, “I think it’s the first kick-off meeting to repair personal relations between Hollande and Merkel. Merkel had done something extremely unusual. She took sides in the presidential elections.” Hollande has supported pro-growth sentiments, while Merkel has had a pro-austerity position.

At 9:00 a.m. (EDT) – the APMEX Precious Metals spot prices were:

  • Gold – $1,559.90 – Down $2.50.
  • Silver – $28.28 – Down $0.14.
  • Platinum – $1,450.40 – Up $6.80.
  • Palladium – $603.50 – Up $7.60.
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