Gold Futures Gain as Prospects Dim for Aid to Greece

Gold futures 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 that 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 snapped the longest slump in 11 weeks.

The metal dropped 5.2 percent in February as euro-area finance ministers approved Greece’s economic package to extend the nation’s bailout accord. On Friday, gold tumbled the most since December 2013 to erase a 2015 gain after a report showed the U.S. 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 0.2 percent to settle at $1,166.50 an ounce at 1:39 p.m. on the Comex in New York. The metal dropped in the previous five sessions, the longest slump since mid-December. On Friday, the price touched $1,162.90, the lowest for a most-active contract since Dec. 1.

Bond Yields

The European Central Bank began buying euro-area government bonds, the first steps of a 1.1 trillion-euro ($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. in London, said in a telephone interview.

On Friday, global holdings in exchange-traded products backed by gold fell for the eighth straight session. They dropped 4.8 metric tons to 1,662.4 tons, the lowest since Jan. 28.

Silver futures for May delivery fell 0.2 percent to $15.776 an ounce on the Comex. The price touched $15.705, the lowest since Jan. 5. The metal hasn’t posted a gain since Feb. 26.

On the New York Mercantile Exchange, palladium futures for June delivery advanced 0.6 percent to $822.95 an ounce.

Platinum futures for April delivery dropped 0.9 percent to $1,148.60. The price touched $1,147.50, the lowest since July 2009. The metal dropped for the fifth straight session, the longest slump since Dec. 16.

In the spot market, the platinum-palladium ratio fell as much as 2 percent to 1.3917, the lowest since April 2, 2002, according to Bloomberg generic prices.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE