Gold steadied around a five-month high on Monday after the Greek vote showed a decisive win for the anti-austerity party Syriza, prompting investors to seek the safety of the metal.
Comex gold for delivery in February traded at $1 287.7 per troy ounce at 08:10 GMT, down 0.38% for the day, shifting in a daily range of $1 299.2 – $1 286.6. The precious metal settled 0.62% lower on Friday.
The Syriza party got better-than-expected voter confidence on Sunday, with only two seats apart from an absolute majority. Party leader Alexis Tsipras has promised to wipe out the better half of the countrys debt, which was accumulated by Greeces €240 billion bailout deal.
However, the new prime ministers intentions do not fall in line with European leaders, who have insisted that Greece must comply with its economy-saving deals terms.
Prior prime minister Antonis Samaras has warned that the conflict of interests between Greece and Europe may lead to the countrys exit from the Eurozone. The news of the strong Syriza win revitalized instability concerns in the European markets and pushed gold prices higher.
“People are very uncertain about the markets and are wondering whether Greece will break out of the euro zone,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong, cited by CNBC.
The precious metal was also supported by increasing speculations that the Federal Reserve will not increase interest rates at its meeting this week.
Although the US economy is showing signs of improvements, which weigh in favor of an interest hike, policy makers might be worried that inflation has not yet reached their 2% target level due to pressure from plunging oil prices.
Gold is up 9% so far this month as economic instability across Europe and falling oil prices have pushed traders to launch a wave a save-haven bids. Additionally, speculators have continuously shown support by increasing their bets on the yellow metal.
According to the U.S. Commodity Futures Trading Commission, net-long positions in gold futures and options climbed 29% in the week to January 20, marking their fourth consecutive weekly increase.
Assets in the SPDR Gold Trust, the biggest bullion-backed ETF, climbed 1.2 tons on Friday to 741.65 tons. Changes in holdings typically move gold prices in the same direction.
The US dollar index for settlement in March was up 0.25% at 95.295 at 08:10 GMT, holding in a daily range of 95.270-95.850, its highest in at least a decade. The US currency gauge climbed 0.73% on Friday to 95.053. A stronger greenback makes dollar-denominated commodities more expensive for holders of foreign currencies and curbs their appeal as an alternative investment, and vice versa.
Pivot Points
According to Binary Tribune’s daily analysis, February gold’s central pivot point on the Comex stands at $1 293.3. If the contract breaks its first resistance level at $1 302.2, next barrier will be at $1 311.9. In case the second key resistance is broken, the precious metal may attempt to advance to $1 320.8.
If the contract manages to breach the S1 level at $1 283.6, it will next see support at $1 274.7. With this second key support broken, movement to the downside may extend to $1 265.0.
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