Bullion Said to Remain 'in Long Run Uptrend'

Spot market gold prices fell back below $1,715 an ounce Monday morning in London, more-or-less in line with where they were two weeks ago after failing to hold gains made during Asian trading. 

"Gold is still following its long term uptrend from 2008 lows," say technical analysts at Scotiabank, "with support from the uptrend at $1,632." 

Silver fell back to around $33.50 an ounce, also in line with last week's close, while stocks edged higher and commodities were broadly flat. 

Euro gold prices meantime came close to one-month lows as the euro rose to a one-month high against the Dollar after comments from German chancellor Angela Merkel that suggested more Greek debt might eventually be written down. 

Greece revealed details Monday of the bond buyback program announced last week, through which the government will buy back its bonds currently trading at a discount to par value.  

The government has said it will spend up to €10 billion buying back its own bonds, though it is only prepared to pay up to a maximum percentage of the face value of the debt. Bondholders will compete to get the best price for a given maturity, with Athens setting the minimum price range (depending on bond maturity) at 30.2% to 38.1%, with the maximum range at 32.2% to 40.1%. 

"[The prices are] higher than previously published or announced," says Spyros Politis, chief executive of an Athens-based fund management firm that holds Greek government debt. 

"At the moment it looks as if it will be successful, or if they miss the target, they will miss it by a small margin. Anything that reduces the overall debt burden is good." 

Chancellor Merkel meantime said over the weekend that a further write down of Greek debt might be possible if Greece's budget moves into primary surplus – meaning the government takes in more in revenues than it spends before debt payments are taken into account. 

"If Greece one day can rely once again on its own revenue," Merkel told German newspaper Bild am Sonntag, "without having to borrow, then we'll have to look at this situation and make an evaluation."  

"[This is] the end of denial," says ING Groep economist Carsten Brzeski. 

"It's definitely a shift, but on the other hand, it's obvious [that a write down will be needed]."

Germany's manufacturing sector saw improved conditions last month compared to a month earlier, although output still appears to have declined, according to purchasing managers index data published by Markit Monday. 

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