Gold is finding support from Greece’s debt problems

Gold is finding support from Greece’s debt problems. This support remains firmly in place. Although Greece is negotiating with the IMF over the details of an aid package, any deal on not finalized yet. With the European Commission the European Central Bank and the IMF all involved in the aid package, the boxes that need to be ticked before any package is enacted are many.

Furthermore, the no-bailout rule that many saw as a pillar of strength to the euro seem to have been abandoned. It may lead to more euro weakness in the future. Despite this possibility of more euro weakness and despite gold’s close relationship with the euro/dollar exchange rate, the metal should hold up well as credit risk remains elevated.

Gold in euros should still outperform gold in dollars. Gold support is at $1,142 and $1,128, while resistance is at $1,160 and $1,166.