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Gold held close to its highest in nearly four weeks on Monday after climbing last week on hopes a US interest rate hike may not come as soon as some had expected, but the gains were curbed as investors waited for cues from talks on Greece’s debt crisis.
Spot gold was little changed at $1,198.86 an ounce by 0350 GMT, near the $1,205.50 hit last week, which was its highest since May 26.
Fed rate hike
Gold rallied last week on a softer dollar after Federal Reserve policymakers said a rate increase would be appropriate only after further improvement in the labour market and greater confidence that inflation would rise.
Non-interest-paying gold has benefited from a record-low rate environment following the 2007-2009 financial crisis. Higher rates would increase the opportunity cost of holding the metal. The Fed comments were “a temporary victory for the gold bulls”, said Phillip Futures analyst Howie Lee. ‘
“Their strength is expected to become stronger this week as Greece enters its make-or-break negotiation phase,’’ he said, adding that market jitters could strengthen the safe-haven appeal of gold.
In recent days, bullion has seen some safe-haven bids from investors worried over a Greek debt crisis that they fear could result in a default and the exit of Athens from the euro zone.
Greece’s new offer
Greek Prime Minister Alexis Tsipras made a new offer on a reforms package to foreign creditors on Sunday, signalling 11th-hour concessions to break a deadlock that has pushed Greece to the brink of bankruptcy. An emergency eurozone summit meeting is scheduled for later in the day.
Asian shares, US stock futures and the euro ticked up on Monday on hopes for a deal. Meanwhile, hedge funds and money managers lowered net long positions in gold, and slashed bullish bets on silver to the lowest in seven months in the week ended June 16.
Speculators’ short positions in gold rose to the highest on record at 88,216 lots, indicating that investors expect the prices of gold to decline.
Gold sector wage talks
Gold traders will also be monitoring gold sector wage talks that are due to start on Monday. The newly elected head of South Africa’s biggest mine union had said on Sunday that his members were still being paid “apartheid’’ wages, signalling a hard line ahead of the talks.
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