Greek debt crisis should support gold price

After gold failed to profit from the weak US dollar the day before yesterday, it successfully bucked the again firmer US currency yesterday and this morning is trading at a good $1,185 per troy ounce. The price evidently found support from the Greek debt crisis, for a new list of proposed reforms submitted by the highly indebted country was rejected by EU representatives as being insufficient. It thus remains unclear whether Greece will be able to afford the bundled repayment of €1.6 billion to the International Monetary Fund which is due at the end of the month. This will probably only be possible if aid payments are released. 

The uncertainty about what will happen next and whether Greece may ultimately have to leave the Eurozone after all should contribute to solid demand for gold. Gold ETFs saw renewed outflows yesterday, on the other hand. Holdings were reduced by 3.7 tons, the SPDR Gold Trust - the world's largest gold ETF - being chiefly responsible. A good 13 tons have thus already been withdrawn from the gold ETFs tracked by Bloomberg since the beginning of the month. For as long as the outflows continue, it is unlikely that the gold price will make any significant gains, says Commerzbanks.