bullion loses sheen to import hold as on 1July, 2015

Speculation that Greece may reach a last-minute deal with its creditors that may avert the threat of the cash strapped nation exiting the euro dampened demand for safe haven assets such as Gold.

Just hours before the expiry of its existing bailout program, Greece on Tuesday requested the EU for a new bailout in the form of a two-year bridge loan from the Eurozone bailout fund called the European Stability Mechanism (ESM).

A stronger dollar added to the pain of the yellow metal by curbing the demand for Gold as an alternative asset. Stronger greenback makes Gold more expensive for those holding other currencies, thus dimming gold demand.

A slowdown in Euro area inflation also tarnished the appeal of Gold, a hedge against rising prices. Consumer price inflation in the Euro area fell to 0.2 per cent in June from 0.3 per cent in May.

Gold may be back with renewed vigor today after Greece defaulted on its 1.6 billion euro loan repayment to the IMF while the EU said that Greece’s request for a new bailout would only be considered later, boosting safe haven demand for the bullion.

At the MCX, Gold futures for August 2015 contract closed at Rs 26,471 per 10 gram, down by 0.75 per cent after opening at Rs 26,625, against the previous closing price of Rs. 26,671. Its touched the intraday low of Rs 26,390 till the closing.