Investing.com - Gold prices held steady in early Asia on Tuesday as investors braced for volatile trade as the final day of Greece's current debt bailout package arrives with a new deal nowhere in sight and wide expectations of defaulting on payments due.
A last-minute series of phone calls and offers failed to reach a breakthrough on Greece's debt package by early Tuesday in Asia, setting the stage for volatile markets.
Talk swirled about the outcome of a planned July 5 referendum with Greece's Prime Minister Alexis Tsipras hinting Monday he might resign if the Greek people vote in favour of the creditors' proposal.
"If the (Greek) people vote yes, then the referendum outcome will be completely respected but I will not serve it," Tsipras said in a television interview. "I'm not an all weather prime minister. I will respect the verdict and prepare the ground as outlined by the constitution and the parliament."
Earlier in the day on Monday, President Barack Obama spoke to France's President Francois Hollande, urging renewed efforts to reach a deal, and then European Commission President Jean-Claude Juncker reportedly made a refined proposal that was rejected by the Greek government with the current bailout due to expire June 30 and no extension on offer.
On the Comex division of the New York Mercantile Exchange, gold for August delivery held mostly steady, up 0.01% at $1,179.10 a troy ounce.
Silver for September delivery rose 0.19% to $15.725 a troy ounce. Copper for September delivery was flat at 2.632 a pound.
Overnight, gold futures inched up on Monday, amid growing possibility of a Greek default and subsequent departure from the euro following a tumultuous weekend of negotiations with its international creditors.
In Athens, officials announced that banks will remain closed until Thursday after the Greece government imposed a set of capital controls on Sunday aimed at preventing a bank run. On Sunday night queues multiplied outside a host of Greek banks in Athens, hours before the government imposed a law limiting citizens to ATM deposits of €60 a day.
Earlier in the day, the European Central Bank capped funding from its Emergency Liquidity Assistance fund to Greek banks at €89 billion in a move that forced the Greek government to close the banks. The banks had been borrowing money from the emergency fund to cover a high volume of deposit withdrawals in recent weeks.
Tsipras surprisingly scheduled a referendum for July 5 on early Sunday morning after high-level talks with its international creditors fell apart on Friday. Before talks collapsed, the creditors reportedly offered Greece a €15.5 billion cash-for-reforms package, which included significant pension reforms and hikes on Value Added Taxes. The package reportedly would have allowed Greece to cover its debts through November.
A no vote for the referendum could provide Tsipras with the public support needed to leave the European Union, while a yes vote could compel Greece to return to the negotiating table with its troika of creditors from the International Monetary Fund, European Commission and the EU.
Germany chancellor Angela Merkel reiterated on Monday the importance of holding the euro together if Greece leaves the area, while adding that the euro zone is in better position to cope with contagion than it had been during a previous Greek debt crisis several years earlier.
In the biggest development of the day, a government official in Athens said Greece will not make a €1.6 billion repayment to the IMF on Tuesday, a bundled payment of four loans it owed during the month of June. Also on Tuesday, the final €7.2 billion tranche of a €240 billion bailout to Greece from its creditors will expire without a deal.
Gold is viewed as a safe-haven for investors in periods of severe economic instability.