February 17, 2015
Gold Snaps Three-Day Gain Before China’s Lunar New Year Holiday
(Bloomberg) -- Gold fell on speculation demand may drop in China as the second-biggest user prepares to begin a week-long holiday, and as European officials still have more than a week to craft a new bailout agreement for Greece.
Bullion for immediate delivery lost as much as 0.5 percent to $1,226.34 an ounce and was at $1,228.41 at 12:35 p.m. in Singapore, according to Bloomberg generic pricing. Gold rose for a third day on Monday to post the longest run of advances in almost six weeks as talks in Brussels to arrange fresh financing for Europe’s most indebted state ended without a deal.
Gold is up 3.7 percent this year amid concern that Greece may run of out funds, and as central banks in Europe and Asia announced more stimulus to bolster growth. Euro-area ministers are trying to strike a deal to keep Greece afloat beyond the end of the month, when its existing bailout program expires. Markets in China will be shut from Wednesday for the Lunar New Year holiday, and volumes for the Shanghai Gold Exchange’s benchmark spot contract fell 18 percent on Monday from Feb. 13.
“Some form of consolidation is expected to occur as Asian traders close out positions ahead of the long Chinese New Year holidays,” Howie Lee, an investment analyst at Phillip Futures Pte, wrote in a note. “Greece still has at least ten days to iron out a new bailout package, but until then, markets will continue to be kept on the edge of their seats.”
The talks in Brussels on Monday ended abruptly, with Greek Finance Minister Yanis Varoufakis saying that the European Commission had offered a path forward that euro-area finance ministers then refused to put on the table. Instead, Dutch Finance Minister Jeroen Dijsselbloem offered a different statement tying Greece to an extension of its existing program.
Without a deal, Greece could run out of money by the end of March, forcing Prime Minister Alexis Tsipras to consider reneging on promises to the electorate or even leaving the single currency.
Gold for April delivery traded at $1,227.30 an ounce on the Comex in New York, little changed from the close on Feb 13. Silver for immediate delivery fell 0.4 percent to $17.2094 an ounce. Spot platinum dropped 0.5 percent to $1,203.25 an ounce, and palladium lost 0.1 percent to $788 an ounce.