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Written by article default Tuesday, 07 February 2012 07:58

Gold falls on Greek talks concerns

Gold slipped for the second consecutive session from 11-week high recorded last week on concerns Greek political party leaders will fail to reach an agreement regarding further austerity measures demanded by international lenders to grant Greece a second bailout out to avoid default next month as 14.5 billion euros of debt matures on Mach 20.

The response of Greek political leaders for the measures needed by international lenders must be provided at 11 a.m. local time today, which is a deadline imposed by the lenders. So far, we are far behind the deadline.

Antonis Samaras, the head of the second biggest political party, said “they are asking us for greater recession, which the country can’t take,” and “I will fight to avoid that.”

Greek Prime Minister Lucas Papademos managed to reach a tentative agreement with three of political party leaders after talks yesterday.

According to an e-mailed statement from the premier’s office in Athens, Papademos and the three political leaders agreed to make further budget-cutting measures equal to 1.5% of GDP in addition to bank recapitalization framework, wage cuts and measures to enhance competitiveness, where they are gathering today to flesh out details of the aforesaid plan; noting that euro area finance ministers' meeting had been postponed till knowing the reply from Greece.

Gold tracked losses in riskier assets, while the worries helped the dollar to rebound on the back of safety demand.

Spot gold is currently around $1717.60 an ounce, after touching a high $1738.18 while the day's low was recorded at $1711.43.

Crude oil is traded lower to around $96.5 a barrel, compared with the day's opening of $97.69.

The dollar index, which tracks the dollar movements versus six major currencies, on the other hand, rebounded to a high of 79.51 after touching a low of 79.00 earlier today.