This morning (6/7), gold prices soared, after the Greek people rejected “austerity”, sparking fears of instability in the Euro zone.
Gold prices opened at $1,172.99/ounce, up 0.4% compared with the close price in the previous session ($1,168.10/ounce).
Currently, at 3:16 p.m. GMT+7, gold is trading at $1,164.40/ounce.
During today, gold prices may fall under the influence of the following factors:
- The referendum in Greece on Sunday (5/7) showed 61.3 percent of Greeks had said “No” on “austerity”. However, this does not mean that this country is forced out of the Euro zone. The Greek government even said that this result would give it more strength on the table of negotiation. Tomorrow (7/7), the Euro summit will be held to discuss Greece’s fate . Thus, the Greek debt crisis will continue without a resolution, not having enough strength to make gold fly.
- Investors seem little worried, because in the case Greece leaves, the ECB will likely boost QE to calm the market. Meanwhile, the Euro may decline, supporting dollar goes up, putting pressure on gold prices.
- Shortly after the result of the referendum, gold prices increased sharply, once again creating “gap”, as investors expected. Therefore, they tend to close buy orders to take profits, pushing prices down.
However, gold prices may rise, there are several reasons:
- China’s stock market plunged, after “shining” early today, meaning that the government support measures failed to spark gains in shares. Money will run away from this market and the cash flow may pour into other assets such as gold.
- In top gold markets like China and India, demand for physical gold may rise while gold prices are relatively cheap.
Forecast: Gold prices are likely to fall toward $1.156/ounce.