Safe Haven Could Boost Gold as Eurogroup Meeting Unfolds

Gold 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 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 dropped 5.2 percent in February as euro-area finance ministers approved Greece’s economic package to extend the nation’s bailout agreement. The metal on Friday erased its 2015 gains and slid the most since December 2013 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 0.4 percent to $1,169.40 an ounce at 9:55 a.m. on the Comex in New York, snapping five straight sessions of declines. Prices slid to $1,162.90 on Friday, the lowest since Dec. 1.

Bullion also gained on Monday as 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.

via Bloomberg

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza