Gold has stabilized on Tuesday, following strong losses a day earlier. In the European session, the metal trades at a spot price of $1279.71. It’s a busy day in the US, with three key events on the calendar – Core Durable Goods Orders, CB Consumer Confidence and New Home Sales.
Greek voters went to the polls on Sunday and gave a sweeping mandate to the far-left Syriza party. Syriza ran on a platform of ending the crushing austerity scheme which Greeks have endured as part of the €240 billion bailout negotiated between and the EU, ECB and IMF. Predictably, the euro fell immediately after the election results, slipping to the 1.11 line. However, the common currency has recovered nicely, gaining about 100 points on Monday and continuing to move upwards on Tuesday.
Syriza’s win certainly throws a monkey wrench into the Greek bailout program, but the new Greek government is likely to negotiate a deal with Greece’s creditors. A Greek exit from the Eurozone may make for interesting headlines, but such a scenario is extremely unlikely. Indeed, Greek Prime Minister-elect Alexis Tsipras has promised to keep Greece in the Eurozone. Still, there remains plenty of uncertainty as to what will happen with the bailout plan, so traders can expect events in Athens to have a strong impact on the currency and commodity markets.
The Federal Reserve starts a two-day meeting on Tuesday and will release a policy statement on Wednesday. The Fed is expected to continue to counsel patience regarding an interest rate hike, and persistently weak inflation means the Fed can take its time before having to make a monetary move. The markets will be combing through the statement and any clues as to the timing of rate hike could have a strong effect on gold prices.
XAU/USD 1279.71 H: 1283.90 L: 1272.47
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