Hope for agreement in the Greek debt dispute weighs on gold

Gold is hovering around the $1,200 per troy ounce mark as the new week gets underway, though it is tending more towards weakness. The slightly depreciating US dollar is doubtless preventing any sharper price falls. There are signs of a turnaround in the debt dispute with Greece, so agreement may be reached today between the highly-indebted country and its creditors. 

The European Commission for example has praised the latest proposals which were submitted at the weekend by the Greek government, describing them as "a good basis for progress". The Eurogroup will be meeting at lunchtime today, when an extension of the existing financial aid could already be agreed. The Eurozone heads of state and government will then meet in the evening. 

Since the gold price has hardly profited at all from the escalation of the debt crisis in recent weeks, any price fall in the event of an agreement will likewise be only moderate, says Commerzbank. Meanwhile, speculative financial investors have retreated from gold for the fourth week running: in the week to 16 June, net long positions were reduced by 7% to 35,000 contracts.