The price of gold is tipped to rise as investors use the precious metal as a hedge against financial fallout from Greece’s ongoing debt crisis.
Gold has been trading at about $US1180 per ounce in the last week, and between $US1170 and $US1210 per ounce for months, despite a strengthening US dollar.
However, the price could climb as investors attempt to mitigate the risks of a possible Greek exit from the eurozone if the country defaults on its debt mountain.
“We are only just starting to see signs of contagion from Greece to other bond and equity markets in the eurozone,” Capital Economics analysts said in a note to investors.
“A Greek default alone may no longer be a huge surprise and the sums involved would be small in the global scheme of things. However, if the uncertainty undermines investor confidence in the rest of the region, the gold price is likely to climb a lot further.” Five years after the first bailout, the possibility of a Greek exit from the eurozone has edged closer than ever before.
European Central Bank president Mario Draghi warned in a speech on Monday that time was fast running out to resolve the country’s ongoing financial woes.
ANZ head of commodity research Mark Pervan is more sceptical of a strengthening gold price if US economic data continues to be largely positive as this will drive the greenback up.
“Gold prices have been plumbing the bottom of the recent range with physical markets soft. A positive turnaround in US data will lift the US dollar and pressure gold,” Mr Pervan said in a note.
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