Gold Higher in Thin Trade
Gold prices were slightly higher today as the metal is finding some support around recent price levels. Gold may potentially benefit as talks seemed to break down today between Greek leaders and EU finance ministers.
Time is running out for Greece to strike a deal with the EU to keep the country from running out of money. The country's current bailout package is set to expire on February 28th, and without an extension or some type of bridge loan, Greece will not be able to fund its government very long.
The lack of progress seen today brings Greece one step closer to a default and possible exit from the EU. While hope remains for some type of deal to be hammered out in time, should a deal not be reached the consequences could be severe and far reaching. While no one can say for sure how a Greek default and/or EU exit would affect financial markets, the potential exists for widespread panic, bank runs and other issues. Money has already been flowing out of Greek banks, and should depositors feel a deal will not be reached further withdrawals may be seen.
The gold market will also be watching stocks very closely this week. Stock futures finished lower today as concerns over Greece mount, and equities will either forge into all time high territory this week or will begin to pullback. An EU/Greece deal could fuel a large relief rally in stocks while lack of a deal could potentially cause panic and risk aversion. Gold and other perceived safe haven assets could potentially benefit from increasing risk aversion and/or lower stocks.
The gold market will pay close attention to this week's FOMC minutes release for further clues on the Fed's plans to hike rates this year as well as the central bank's assessment on economic conditions.
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17 Feb 2015 | Categories: Gold
