Gold prices advanced on news that a new deal was reached in Greece that will help the country avoid a default. This deal has come after weeks of talks between government officials and private-sector creditors and it now paves the way for the next installment of bailout aid.
By TATYANA SHUMSKY
FEBRUARY 9, 2012, 10:37 A.M. ET
Wall Street Journal
NEW YORK—Gold prices advanced Thursday amid a broad market rally sparked by a much-delayed austerity deal in Greece that will help the country avoid a default.
The most actively traded gold contract, for April delivery, was recently up $19.10, or 1.1%, at $1,750.10 a troy ounce on the Comex division of the New York Mercantile Exchange.
Athens agreed on a package of economic overhauls and spending cuts that complies with demands set by international creditors. The deal comes after weeks of wrangling between government officials and private-sector creditors, as well as interparty discord within the Greek government, and paves the way for the next installment of bailout aid and will help Greece avoid a messy default.
Gold futures rallied on the news amid relief that the threat of a euro-zone liquidity crunch has passed. Some market participants had worried that a sovereign debt default in Greece would rock the European financial system and spark a rush to cash that would damp the value of less liquid assets like gold.
"If there was a failure emanating from Greece, the chances of a euro down slide would have hurt many European banks who would've had to sell gold to raise dollars," said George Gero, vice president at RBC Capital Markets Global Futures.
Gold's gains coincided with rallies in other markets, as crude oil rose 1.2% to trade at $99.85 a barrel while copper jumped 1.3% to $3.9605 a pound. The Standard & Poor's 500 index was recently up 0.2% at 1353.10.
A weaker dollar added to gold's allure by making dollar-denominated gold appear less expensive to buyers who use other currencies. The ICE Dollar Index fell to 78.455, down 0.3%.
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