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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