Vang SJC

Last Friday, gold decreased a bit but held near a three-week high, bolstered by the U.S. Federal Reserve’s caution on an interest rate rise and worries over Greece. In Friday trading session, gold reduced by nearly 0.3% from the open price of $1,201.68/ounce to the close price of $1,199.75/ounce, as investors stepped to the sideline before the weekend.

Today (22/6), spot gold price was $1,195.23/ounce at 4:21 p.m. GMT+7.

The hottest events today are Eurogroup meeting and Euro summit, which will be crucial to Greece’s fate.

On Sunday, Greek Prime Minister Alexis Tsipras made a new offer on a reforms package to foreign creditors. According to a statement from Tsipras’s office, the prime minister presented the three leaders Greece’s proposal for a mutually beneficial agreement that will give a definitive solution and not a postponement of addressing the problem. With good will from Greece, international creditors may give it one more chance. Moreover, European economy is recovering from the finance crisis in 2008, if Grexit happens, it will cause huge volatilities and hurt Euro zone.

  • Therefore, two meetings today may give good news to Greece and affect gold demand as heaven asset.

In addition, gold is likely to go down because:

  • Growing concerns of Greek default may pull Euro down and give some support to Dollar, make negative effects on gold price.
  • Influence from Fed’s speech after FOMC meeting has faded, reducing pressure on Dollar.
  • Gold rallied for two weeks, so maybe many investors will close order and take profit for hedging volatilities, especially when gold price rised to $1,200/ounce.

However, gold may go up due to:

  • Withdrawals from Greek banks totaled about 4 billion Euros last week as worries mounted that the months-long standoff between Athens and international creditors could end in Greece defaulting on its debt and being pushed out of the euro zone. Only for today, Greek pre-orders for deposit withdrawals for had already reached 1 billion euros. As we see, investors are nervous, not only Greeks but maybe all Europeans also. Moreover, the money withdrawed from Greek banks can be poured into heaven assets, like gold.
  • Russia’s gold reserves rose to 40.2 million troy ounces as of June 1 compared with 40.1 million troy ounces a month earlier. Demand from Russia may support for gold.

Forecast: Gold may be go down, reaching the price of $1,184/ounce.

Linh Nhan