You are here
Gold gains as dimmed outlook for Greece aid boosts haven appeal
[NEW YORK] Gold rose from a three-month low amid concern that a provisional agreement to extend aid to Greece will unravel, boosting demand for haven assets.
Eurogroup Chairman Jeroen Dijsselbloem said on Sunday that the list of measures the Greek government proposed as part of its four-month aid accord were "far" from complete and the country probably won't receive an aid disbursement this month.
Gold dropped 5.2 per cent in February as euro-area finance ministers approved Greece's economic package to extend the nation's bailout agreement. The metal on Friday erased its 2015 gains and slid the most since December 2013 after a report showed the US jobless rate fell to the lowest in almost seven years, increasing speculation that the Federal Reserve will raise interest rates soon.
"Renewed trouble for the euro zone means potentially much more weakness in the single currency, which would be bullish for gold as a safe-haven investment," Tai Wong, the director of commodity products trading at BMO Capital Markets Corp in New York, said in a telephone interview.
"The fact that this is getting floated probably makes some people think they're going to buy gold at the lows."
Gold futures for April delivery climbed 0.4 per cent to US$1,169.40 an ounce at 9:55 am on the Comex in New York, snapping five straight sessions of declines. Prices slid to US$1,162.90 on Friday, the lowest since Dec 1.
Bullion also gained on Monday as the European Central Bank began buying euro-area government bonds, the first steps of a 1.1 trillion-euro (US$1.2 trillion) plan to fight deflation in the region. Yields on German and French bonds fell.
"With bond yields at record lows, the opportunity cost of holding none-yielding assets like gold is much lower," Jonathan Butler, an analyst at Mitsubishi Corp, said in a telephone interview from London.
Holdings in bullion-backed exchange-traded products slid for an eighth session on Friday, falling 4.8 metric tons to 1,662.4 tons, the lowest since Jan 28.
Silver futures for May delivery lost 0.2 per cent to US$15.78 an ounce on the Comex. On the New York Mercantile Exchange, palladium advanced, while platinum touched the lowest since July 2009.