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Gold price suggests investors not betting on Grexit
A gold rush has failed to materialise as Greece edges closer to total financial collapse, suggesting investors aren’t betting on an imminent ‘Grexit’.
A brief rally in the precious metal in early trading faded towards the close in London, as investors discounted the possibility of Greece exiting the currency bloc, despite the government’s shut-down of the country’s banks and stock market.
Gold – which is traditionally seen by markets as the ultimate safe-haven asset – initially gained 2.5pc, but by the afternoon in London it had fallen back to a level of $1,176 per ounce.
“The markets seem to be calming down again after this first hefty reaction,” said Commerzbank in a note to investors.
However, the bank added that uncertainty about what will happen next in and to Greece should contribute to solid demand for gold and lend support to its price.
Figures released last month by the World Gold Council showed that Germans had increased their buying of gold coins and bars of bullion by 20pc to 32.2 tonnes in the last quarter, the highest rate of purchases seen in a year, amid growing unease over the situation in Greece.
Oil prices were also hit by fears that the standoff between Greece and its creditors would stall economic growth in Europe. Brent crude fell around 0.9pc in London to around $62 per barrel. Higher European demand had been cited recently as one of the factors supporting oil prices.
“The escalation of the debt crisis in Greece has generated increased risk aversion and is thus putting pressure on risky assets – which include crude oil as well as equities,” said Commerzbank.
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