[miningmx.com] — SPOT gold hovered around $1,600 on Thursday, with investors waiting for the outcome of a euro zone summit on Greece’s debt crisis while concerns around the US debt ceiling talks continued to support sentiment.
European Union leaders will meet later in the day to seek a
convincing solution to Greece’s debt crisis. Failure to reach
agreement could cause economic damage to the global economy, the
head of the European Commission warned.
The gold market is likely to wait for direction as investors
watch for the outcome of the meeting, as well as progress in the
US deficit talks.
“A positive resolution to either the Greek debt problem or a
deal by US lawmakers, or both, will likely undermine gold,
targeting $1,550 and $1,500 in the short term,” said a
Singapore-based trader.
“A failure will push gold back into overdrive with upside
technical targets around $1,640 to $1,650 and then $1,700.”
Spot gold was nearly flat at $1,601.09 an ounce by
06:01 GMT, after rising nearly 0.8% in the previous
session. Gold hit a record of $1,609.51 on July 19.
Although short-term risk could weigh on prices, gold’s
outlook remains bullish in the longer term, as the euro zone
debt crisis is unlikely to end soon and the United States still
has plenty to tackle even if a short-term debt agreement is
reached.
“Even if they have a short-term deal, they still have so
many things to do before a long-term agreement,” said Ronald
Leung, a physical dealer at Lee Cheong Gold Dealers in Hong
Kong.
“People are looking at $1,610 as the next target, after gold
finishes this round of consolidation and resumes the uptrend.”
Spot silver inched down 0.1 percent to $40.04 an
ounce, hovering below a 2-1/2 month high of $40.84 hit on July
19.
The gold-silver ratio, used to measure the ounces of silver
needed to buy one ounce of gold, stood at 40, well below the
average of 55 since the beginning of 2010 but above the April
lows near 30 when silver rose close to $50.
