Investing.com - Gold prices spiked on Monday, rallying along with other safe-haven assets after emergency bailout talks between Greece and its international creditors broke down over the weekend, pushing Athens to the brink of a debt default and possible euro zone exit.
Gold futures for August delivery on the Comex division of the New York Mercantile Exchange tacked on $7.30, or 0.62%, to trade at $1,180.50 a troy ounce during European morning hours after hitting a session high of $1,187.60. Futures were likely to find support at $1,167.10, the low from June 26, and resistance at $1,200.80, the high from June 22.
Investors nervously eyed developments in Greece’s debt talks ahead of the looming deadline for Greece to repay €1.6 billion to the International Monetary Fund on Tuesday. If Greece misses the payment it risks going into default, which could trigger the country’s exit from the euro area.
Greek Prime Minister Alexis Tsipras abandoned negotiations with creditors on Saturday and called for a referendum to be held on July 5 on the terms proposed by lenders for extending the country’s bailout.
A yes vote will mean that Greeks are willing accept the latest reforms offered by creditors to Athens, while a rejection will likely lead to Greece's exit from the single currency union.
A Greek official said Monday that banks would remain closed for six days starting on Monday to avert a crisis in the banking sector after deposit outflows accelerated over the weekend. Withdrawals at ATM machines were to be limited to €60 a day per account.
The euro hit lows of 1.0953 against the dollar, the weakest since June 2, and was last at 1.1076, off 0.78% for the day, while the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.37% to 95.95.
On Friday, gold fell to a three-week low amid indications that the U.S. economy is regaining strength after a recent bout of weakness, supporting the case for higher interest rates later this year.
Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.
Later Monday, the U.S. is to publish a report on pending home sales.
Also on the Comex, silver futures for September delivery rose 8.4 cents, or 0.53%, to trade at $15.84 a troy ounce, while copper for September delivery inched up 0.1 cents, or 0.05%, to trade at $2.637 a pound.
On Sunday, the People's Bank of China cut its benchmark interest rate by a quarter percentage point to 4.85% from 5.10%, in order to spur economic activity and boost growth.
It was the fourth rate cut since November, indicating that Beijing is becoming more aggressive in supporting the economy as its momentum slows and deflation risks rise.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.