Gold futures retreated Monday as a Greek election victory for pro-euro politicians dampened demand for the metal as a safe-haven asset.
Gold for August delivery GCQ2 -0.34% slipped $11.90, or 0.7%, to $1,615.70 an ounce on the Comex division of the New York Mercantile Exchange.
The losses came on the heels of a strong week for gold futures, in which the benchmark contract rose 2.3% amid hopes for fresh easing from the world’s major central banks.
Selling “may be limited as the slow recovery on two continents continues,” said George Gero, a vice president at RBC Wealth Management, in emailed comments. Gold is likely to trade in a range between $1,600 to $1,650 an ounce in the short term.
Investors looked past Greece and relief with election results there to worry about Spain and rising cost of Spanish debt. Yields on Spain’s 10-year bonds surpassed 7% early Monday.
Concerns about a possible Greek exit from the euro zone helped support gold the previous week, but such concerns eased somewhat after the New Democracy party, which supports measures to keep the euro, won a narrow victory in Sunday’s election.
HSBC analysts said in a note ahead of the Greek election that, regardless of the outcome, they expected gold to move above $1,900 by year’s end, “based on the likely impact of easy monetary policy.”
“The possibility that the Federal Reserve and other central banks may loosen monetary policy later this year … is potentially supportive of gold, in our view. Government policies aimed at keeping real interest rates negative are especially positive for gold,” they said in the note.
The analysts also cited increased gold demand by central banks, but said this could be offset by higher scrap-gold supplies and lower jewelry demand.
Elsewhere in the metals complex Monday, silver followed gold lower, with the July contract SIN2 -0.30% off 40 cents, or 1.4%, to $28.34 an ounce, Market Watch reported.
July copper HGN2 +0.25% fluctuated between small gains and losses, recently up less than one cent, or 0.2%, to $3.39 a pound. Platinum for the same month’s delivery PLN2 -0.32% turned lower, off $4, or 0.3%, to $1,483.20 an ounce.
