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Gold inches up ahead of Brussels summit, as Greek Drama intensifies

Published 07/06/2015, 01:06 PM
Updated 07/06/2015, 01:15 PM
Gold futures posted modest gains on Monday to move above 1,170 an ounce

Investing.com -- Gold futures ticked up on Monday amid a relatively flat dollar, as investors digested a resounding No vote in the historic Greek referendum that could further complicate tense, deliberate negotiations with international creditors.

On the Comex division of the New York Mercantile Exchange, gold for August delivery gained 5.10 or 0.45% to 1,172.90 a troy ounce, paring earlier losses. On Monday, gold futures fell to a session-low of 1,162.00 before reaching a peak of 1,173.60. While gold has closed lower in 10 of the last 15 sessions, it is still up modestly by roughly 0.45% over the last month.

In Athens, officials from the Greek bank association said banks nationwide will remain closed through at least Wednesday as the nation awaits a decision on whether it will receive further liquidity assistance from the European Central Bank. Deposits from ATMs throughout Greece will remain capped at €60 per day, officials added.

It came less than 24 hours after Greek citizens turned down a closely watched referendum, which could have lent support to a cash-for-reforms deal proposed by leaders from the euro zone and may have led to the resignation of prime minister Alexis Tsipras. In a sweeping vote over the weekend, the Greek people rejected the referendum by a 61.3% to 38.7% margin. Also, the Greek government announced that Euclid Tsakalotos will be sworn in as the nation's next finance minister on Monday evening following the resignation of Yanis Varoufakis earlier in the day. Tsakalotos, an Oxford-educated economist, will represent Greece in a meeting of euro zone finance ministers on Tuesday in Brussels.

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Meanwhile, Germany vice chancellor Sigmar Gabriel indicated that Greece is teetering on insolvency and must present an offer beyond the measures it has proposed in recent weeks if it hopes to reach a deal. Greece's latest proposal could be modeled on the latest offer crafted by European Commission president Jean-Claude Juncker, according to multiple reports.

Elsewhere, the International Monetary Fund sent indications that it may lend financial support and debt relief to Greece if Tsipras' Syriza government is willing to enact the austerity measures needed to appease its creditors. Last week, Greece became the first advanced nation in more than 70 years to default on a loan repayment to the IMF.

"The IMF has taken note of yesterday's referendum held in Greece," IMF head Christine Lagarde said in a statement. "We are monitoring the situation closely and stand ready to assist Greece if requested to do so."

Gold is viewed as a safe haven for investors in periods of severe economic instability.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, was down 0.12% to 96.25 in U.S. afternoon trading after paring earlier gains. Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.

Silver for September delivery gained 0.098 or 0.63% to 15.753 an ounce.

Copper for September delivery fell 0.082 or 3.14% to 2.535 a pound.

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