The SPDR Gold Trust (ETF) (NYSEARCA:GLD) is still on its downward slope as those running from the crisis in Greece have found safety outside of the yellow metal. On this morning’s pre-market the rice of the ETF fell by 1%to $110.94, falling below $111 for the first time since April.
Greece still seems to be heading toward an exit from the Euro, and more economists are betting on the exit after the No vote in Sunday’s referendum on the bailout package offered by the Euro group. Today Alexis Tsirpas is set to deliver a new offer to the country’s Euro partners in order to secure funding for the country’s banking system.
Gold doesn’t shine in Greek crisis
In times of crisis the price of gold is supposed to increase as those worried about the future look for the historical safety of the metal to save them from the worst of the fallout. Instead traders appear to have flocked to state bonds in more stable parts of the world in order to secure the value of their investment in the event of a Grexit.
Since the start of the year the price of the SPDR Gold Trust (ETF) (NYSEARCA:GLD) has fallen by more than 2.3%. In the last twelve months it has lost more than 12%. The specter of inflation, that was used by sellers to shift investment grade gold for years during the financial crisis, has receded in the US.
US bonds appear to be the destination for many of the traders trying to get away from the Greek fallout. On Monday yield on the benchmark 10-year Treasury note hit 2.280 percent, down from 2.393 percent before the Greek vote took place.
Gold on the other hand is being hit hard by the Greek crisis, and its time as the default place for safe money seems to be over for the time being.
Greece looks for a solution
After Finance Minister Yanis Varoufakis resigned on Monday, Greece quickly put its chief negotiator Euclid Tsakolotos in the position in order to lead the country through a new round of hard talks with EU partners. The ECB has refused to raise a cap on the ELA to Greek banks meaning that even with the country’s banks being closed, cash will likely run out sometime before the end of the week.
Greece’s non-payment of a loan to the IMF last Tuesday was met with understanding from the fund. On Monday Christine Lagarde, the head of the body, said that if the country asked for more help she would try to meet it. Before Sunday’s vote the IMF released a report that called on Europe to offer Greece debt relief and said that current levels of debt were simply untenable.
The Greek leaders will present a new deal to the EU today in the hopes of securing a third bailout from its partners. It’s not clear if debt relief is on the table.
“The door is open to negotiations, but there isn’t much time left and the situation is urgent both for Greece and for Europe,” French President Francois Hollande said in a meeting with press on Monday.