|Gold Firms As Greece Edges Closer To Exiting Currency Union |
Los Angeles CA, (Tangible Investments) - by James O'Dell - The price of Gold remained steady in early trading on Monday after Gold and Silver prices retreated modestly on Friday, as Gold eased $0.50 or 0.04 percent to finish the week at $1,206.00 an ounce after the dollar got a boost when Fed Chair Janet Yellen said in a speech on Friday that the U.S. central bank was poised to hike interest rates sometime later this year. The price of Silver eased $0.05 or 0.29 percent to end the week at $17.11 an ounce while the Gold/Silver ratio rose to 70.49.
The week began with the Gold price hitting a three month high of $1,232.41 an ounce on Monday, after Chicago Fed President Charles Evans, in a prepared speech, called for the central bank to postpone any rate hikes until at least 2016. Evans argued that with U.S. inflation so low for so long, the Fed should allow inflation to rise above the central bank's 2 percent target. "Policy should be sufficiently accommodative so that ... the odds should favor modestly overshooting our 2 percent target sometime in the medium term," said Evans, a voting member of the Federal Open Market Committee (FOMC).
On Tuesday, Greek Finance Minister Yanis Varoufakis said that he expects an accord to be struck with his nation's troika of creditors soon. The Greek government remains at the very brink of defaulting on its obligations, and is due to make a payment of 1.5 billion euros to the International Monetary Fund (IMF) on June 5th. Mr Varoufakis continued to deny that the country might leave the euro zone, adding instead that "Another currency is not on our radar."
Greece remains at loggerheads with the European Union (EU) and IMF over economic reforms that must be adopted before creditors will release the final 7.2 billion euro tranche of the country's 240 billion euro bailout fund, which has been withheld since August. Gold edged higher on Wednesday as it recovered from a steep slide on Tuesday, but gains were muted as the dollar continued to strengthen against the euro after a Greek official said the nation may not be able to make its next repayment to the IMF.
The dollar fell 0.4 percent against a basket of major currencies on Wednesday following the release of the minutes of the April Federal Open Market Committee (FOMC) meeting, which indicated that a rate hike in June would be untimely given the recent spate of weaker than expected economic data. A review of the Fed minutes suggests that policymakers felt it would be premature to raise interest rates in June, a view widely held in the marketplace. "Gold will benefit from the Fed's decision to postpone its rate hike and the bar for Gold's support level looks to be raised from here," says Phillip Futures' Howie Lee.
Meanwhile, German Chancellor Angela Merkel still says that her goal is to keep Greece in the euro, but her finance minister says that he would not rule out a Greek exit from the 19 nation currency. German Finance Minister Wolfgang Schaeuble argued on Friday that Greece may need another currency to exist alongside the euro, just in case the nation’s negotiations with its creditors should fail. Schaeuble used the nation of Montenegro as an example, because even though that country uses the euro, it is not a member of the currency union.
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