Gold is seeing some moderate selling pressure this morning as investors are hopeful that a last minute deal between Greece and its creditors will be reached before the expiration of the country’s four month bailout extension. Time is of the essence at this point. Even if a deal were reached today, that deal still has to be finalized and the transfer of funds set up.
Reports on progress between Greece and its creditors have been mixed, however. Some reports suggest that a debt restructuring deal is imminent while others suggest that the two sides have a fair amount of issues to still hammer out. Investors are, for today, choosing to look on the bright side of things as stock futures move higher and gold moves lower.
Obviously, the risk appetite being seen today could quickly evaporate if news of a deal does not materialize soon. As the week progresses, markets may get more anxious if a deal is not announced, and today’s optimism could quickly fade as risk aversion sets in. This could potentially boost demand for gold and other precious metals.
Greece will likely remain the main area of market focus this week as the economic data release calendar is on the lighter side. Markets will get the latest data on existing home sales, new home sales, PMI manufacturing, durable goods orders, GDP, weekly jobless claims, consumer sentiment and more.
The data points will continue to be closely watched by investors as the data stream may give further indications about the timing of the first rate hike. Following last week’s FOMC meeting and subsequent press conference, investors took the central bank’s commentary to be dovish. This drove stocks higher and may continue to do so. The Fed appears to be in no hurry to raise rates, and if and when they do elect to do so, the pace of such hikes may be extremely gradual.
While this may keep risk appetite higher and boost stocks and risk assets, it could also give the precious metals complex a lift, as well. Gold has been stuck in a trading range, however, and it may take some significant forces to drive gold from its recent range.
As of this post, the metal is once again fading from the $1200 level, and may find some support once again in the $1180 area. The bulls need to take trade above the $1220 area in order to garner more buying interest. Unless the gold bulls are able to do so, gold may continue to see any rallies sold into and the market will remain vulnerable to a fresh leg lower in price.
