Gold prices fell on Tuesday as the prospect that Greece will default on a repayment to the International Monetary Fund knocked the euro against the dollar, and as investors remained wary over the metal’s longer-term prospects.
Greece is just hours away from defaulting on a 1.6 billion euro ($1.8 billion) loan from the IMF. Talks with creditors broke down over the weekend, with Prime Minister Alexis Tsipras calling for a bailout referendum on July 5.
Spot gold fell one percent at $1,168.65 an ounce. It was trading $1,170.11 at 1310 GMT, while U.S. gold futures for August delivery were down $8.60 an ounce at $1,170.30.
“The gold price is telling you the market is not concerned about Greece. It isn’t as systemically important as it used to be,” said Michael Widmer, metals strategist at Bank of America Merrill Lynch. “The dollar is the bigger force at the moment.”
Gold, which often benefits in times of financial market turmoil, has found little support from safe-haven bids.
While euro zone stocks, low-rated bonds and the euro weakened as Greece looked set to default, there was little evidence of panic, with investors pointing to Europe’s improved ability to fight financial contagion since the height of the euro debt crisis in 2011.
“There is still confidence that there will be a deal at the last minute, and if that is not the case, that the ECB (European Central Bank) will step in and make sure there is no contagion,” ABN Amro analyst Georgette Boele said.
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