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PRECIOUS-Gold firms in safe-haven spurt after Greece rejects bailout
July 6, 2015 / 10:14 AM / 2 years ago

PRECIOUS-Gold firms in safe-haven spurt after Greece rejects bailout

* Dollar gains vs euro, European shares down

* Greece rejects bailout terms in referendum

* Platinum falls to lowest since 2009 (Rewrites paragraph 1, adds comment, updates prices)

By Marcy Nicholson and Clara Denina

NEW YORK/LONDON, July 6 (Reuters) - Gold eked out small gains on Monday in a rare spurt of safe-haven buying after Greek voters rejected terms of a bailout package, deepening the country’s economic woes, and offsetting pressure from a rising U.S. dollar.

In a referendum on Sunday, Greece overwhelmingly voted against conditions for a rescue package.

Spot gold was up 0.2 percent at $1,170.01 an ounce at 5:12 p.m. EDT (2112 GMT), while U.S. gold futures settled up $9.70, or 0.8 percent, at $1,173.20 an ounce.

French and German leaders told Greece’s government the door for negotiations with creditors remained open but urged it to make credible proposals at a euro zone summit to reach a cash-for-reform deal and so avoid a euro zone exit.

“It seems likely there were some concerns that the rhetoric from that joint Merkel-Hollande press conference would be quite harsh and, therefore, make the worst outcome for Greece more likely than previously,” said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York.

“As it turns out, the Merkel comments were fairly cautious and non-incendiary, and the market sold back off.”

The Greek vote leaves the country in uncharted waters, risking a banking collapse. Without more emergency funding from the European Central Bank, Greece’s banks could run out of cash within days. European leaders called a summit for Tuesday to discuss their next move.

Equity markets around the world fell and U.S. oil prices tumbled nearly 8 percent.

Gold is typically seen as an alternative investment in times of financial and economic uncertainties but the Greek crisis has largely failed to attract safe haven buying, until now. Gold initially rallied during Asian hours.

“There isn’t the fear of a pan-European crisis, as was the case a few years ago, when you saw a rush to gold, which was already in a bull market,” Macquarie analyst Matthew Turner said.

Hedge funds and money managers cut their bullish position in COMEX gold futures and options by more than half in the week ended June 30, ahead of the Greek default on a payment to the IMF, U.S. data showed.

Platinum fell 3.4 percent to its lowest since March 2009 at $1,043.50 an ounce.

Silver was down 0.4 percent at $15.73 an ounce and palladium fell 0.1 percent to $680.25 an ounce, close to a two-year low hit last week. (Additional reporting by A. Ananthalakshmi in Singapore; Editing by Mark Potter, Marguerita Choy and Andrew Hay)

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