|Greek Bailout Deal To Go Before Voters |
Los Angeles CA, (Tangible Investments) - by James O'Dell - Gold and Silver prices inched up on Monday, with Gold rising $1.90 or 0.16 percent at the time of this writing, to $1,177.40 an ounce following failed Greek bailout talks that broke down over the weekend after the yellow metal ended the week lower at $1,175.50 an ounce on Friday. The price of Silver is up 0.04 or 0.25 percent to $15.85 an ounce, after finishing the week lower at $15.81 an ounce. The Gold/Silver ratio, a measure of the number of Silver ounces needed to buy an ounce of Gold, rose to 74.35.
The week began with the world's largest Gold backed exchange traded fund (ETF), seeing an inflow on Monday of 3.5 tons of Gold, its largest one day jump in the past 10 weeks. European leaders gathered in Brussels to attend yet another emergency summit to salvage the Greek bailout deal. Many felt that Greece might resort to selling off its Gold reserves to pay the debt should negotiations fail, but Commerzbank AG says Greece is unlikely to sell its Gold, valued around $4.3 billion, because it would only postpone a default.
“Selling Gold would deprive the country of its only really valuable reserves, which could be put to good use at a later date, perhaps to stabilize a new currency if Greece exits the euro,” wrote Commerzbank analysts, including Eugen Weinberg. “We think it very unlikely that Greece is willing to go down this path.”
Capital Economics analysts said last week that they expect demand from India to push Gold prices over $200 higher by year-end. “Overall, we believe India’s Gold demand will reach 900-1,000 tons this year, up from about 800 tons in 2014 when demand was constrained by high import duties,” said Capital's Simona Gambarini. “This is one factor underpinning our forecast that Gold prices will rise to $1,400 per ounce by year-end.”
Expectations of the Fed's first interest rate increase in nearly a decade continue to weigh heavily on Gold and is keeping the yellow metal contained within a narrow range. “The value of the dollar has depreciated recently, but it is still much stronger than prior hiking cycles, and this will likely continue to factor into the FOMC’s future policy decisions,” said economists at Nomura. ”Economic and financial developments in coming months likely will drive FOMC decisions."
The latest proposal on the table by Greece’s Troika of creditors — the International Monetary Fund (IMF), the European Central Bank (ECB) and the European Commission (EC) — would add a five month extension and 15.5 billion euros ($17.3 billion) of funding to Greece’s current bailout program. Greek Prime Minister Alexis Tsipras broke off talks on Saturday and announced that he would put the new terms before Greek voters in a July 5 referendum.
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