Gold price jumps only temporary, but ongoing Greek uncertainty to support the price

The debt crisis in Greece, which escalated dramatically over the weekend, is driving up gold prices as the new week gets underway. 

The markets seem to be calming down again after this first hefty reaction, however: the euro is recouping some of its losses again while gold has shed some of its gains accordingly. The Greek government has introduced capital controls, and banks in the country are to remain closed this week amid fears that the run on banks could worsen it had started at the weekend following the failure of talks with the Eurogroup on further financial aid.

Although the ECB has kept the emergency loans to Greek banks in place, it has frozen them at their current level. The Greek parliament has decided to hold a referendum next weekend on the terms of the aid programme that has not yet come about.

Depending on the outcome of this referendum, the beginning of a "Grexit" could therefore have been set in motion at the weekend. What is more, a repayment to the IMF of €1.5 billion is due tomorrow, which Greece is hardly likely to be able to make. 

The uncertainty about what will happen next in and to Greece should contribute to solid demand for gold and lend support to its price.