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Gold pauses Friday's slump to three-week lows and is trading higher today as the hefty decline spurred physical demand. Physical purchases were also driven by the upcoming Lunar New Year in China. On Friday the better-than-expected jobs data fuelled expectations that the FED is going to hike interest rates rather sooner than later, weighing on the price of the precious metal as higher interest rates make gold less attractive as the metal is not yield-bearing. A stronger greenback recently weighed on the dollar-denominated precious metal as it makes it more expensive for holders of other currencies.
Today the precious metal was sought after as safe-haven asset on renewed concerns over the developments in Greece. Over the weekend Greek Prime Minister Alexis Tsirpas ruled out any extension of the international bailout and reaffirmed that he will stick to his plan to roll back austerity measures. On late Friday Standard and Poor's downgraded Greece from B- to B, only one notch higher than "default" and kept the outlook for Greece negative. S&P warned that time is running out for Greece to reach an agreement.
The precious metal is currently quoted at USD1,240.90, +0,52% a troy ounce. On Thursday the 22nd of January gold reached a five-month high at USD1,307.40.
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