Gold crosses $1,200 mark due to weak USD and Greek debt crisis

Gold rose above the $1,200 per troy ounce mark yesterday, high in last three weeks due to the weak US dollar and the escalating Greek debt crisis. The meeting of Eurogroup finance ministers came no closer to reaching agreement in the debt dispute with Greece. It would appear that the Greek government is still unwilling to make any concessions. 

EU summit of heads of state and government will now try to move things forward on Monday, however the prospects of agreement being reached are more than doubtful. In any case time is running out, increasing the fear of Greek Sovereign bankruptcy. 

There is now fear that the banking system would probably cease to function properly in the event of national bankruptcy. This should lend good support to the gold price, though little in the way of tailwind can be expected at present from Asian gold demand, which is also likely to have been subdued in May in both China and India.

This at least is what is suggested by the Swiss gold export figures, which show that exports to China and Hong Kong fell by a further 4.7% - from their already relatively weak previous month's level - to an eight-month low of 54.8 tons. Month-on-month, exports to India actually plummeted by more than half to 24.5 tons. The Census and Statistics Department of the Hong Kong government will next week be publishing the figures for gold trading with the Chinese mainland.