Gold Price Reacts To Greece Anti-Austerity Measures
Gold fell Monday on news that the radical, far-left Syriza party won Sunday’s general election in Greece, which sent the euro to 11-year lows in the wake of Mario Draghi’s fateful decision to implement quantitative easing. A lot is happening in Europe.
Some are discussing a possible break up of the bloc, but let’s not get ahead of ourselves.
The spot gold price at $1,282/20/1,283.00 fell south to $11.20 on Friday’s close, trading within an intraday range of $19.
Syriza will likely win 149 seats, just short of the majority, and has formed anti-austerity coalitions with the right-wing Greek Independents party, which will likely enjoy 13 seats.
Syriza’s leader Alexis Tsipras aims to renegotiate Greece’s 240 billion euro bailout, which could lead to a default on its debts. The euro fell to 1.1098 on the news before rising and settling at 1.1251.
“There will no doubt be more moves in the embattled currency. This in turn should move gold around to a degree… the longer-term picture is unclear at the moment, so look for day trade opportunities as and when they present themselves,” Marex Spectron’s David Govett said.
“Gold has lost upside momentum on a stronger dollar due to increased contagion risk in the eurozone following Syriza’s victory,” FastMarkets analyst Tom Moore said.
“We would expect the Fed to exercise caution over its rate decision this week, providing gold with renewed upside pressure. A move toward raising rates would otherwise boost dollar strength, further reducing the US’ global competiveness,” he added.