Greece may be one of the smaller members of the Euro zone, but it continues to command the attention of world markets, as the bailout crisis continues. After the New Greek government said it would not renew the EUR 240 billion bailout under the current terms, the ECB announced that it will no longer accept Greek government bonds as collateral for ECB loans as of February 11. Greece wants a new deal that removes the harsh austerity steps required under the bailout. However, Germany and Greece’s international creditors do not want to rewrite the bailout agreement. Greek Prime Minister Alexis Tsipras and Angel Gurria, chairman of the OECD, will meet on Tuesday to try and narrow the gap between the parties.
Greece’s Parliament approved the government’s economic plan in a vote on February 10, 2015 which sets up a showdown with country’s international creditors beginning this week in Brussels. With 162 ‘yes’ votes against 137 ‘no’ with one absentee lawmaker, Prime Minister Alexis Tsipras earned approval for a plan that rolls back many of the austerity measures agreed by the former government of Antonis Samaras. On the Comex division of the New York Mercantile Exchange, gold futures for April delivery rose 0.02% to trade at $1234.20 a troy ounce. Besides, silver futures for March delivery rose 0.07% to trade at $16.915 a troy ounce. However, copper for March delivery fell 0.20% to trade at $2.545 a pound.
Gold briefly hit the lowest levels of the session after rumors surfaced that the European Commission could propose a six-month extension to Greece’s bailout program, which is due to end on February 28. Athens main stock index rallied nearly 7%, while the yield on Greek 10-Year bonds tumbled sharply to trade below the 11%. Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.