Silver futures extended a bear run today, after failing to hold on to sizable gains yesterday. Investors appeared to shrug off the worst-case scenario fears that had gripped the markets earlier, following developments in Greece.
As of 12:42 BST today, silver futures for September delivery on the COMEX division of the New York Mercantile Exchange had shed a further 0.45 percent to $15.655 per troy ounce. The contract was on track to log a six percent monthly loss, the biggest decline since September.
The white metal surged as much as one percent yesterday, but by afternoon in Europe had traced back much of the gains, eventually closing with a hefty 1.3 percent loss.
Greece’s decision to impose a week-long bank holiday and to limit cash withdrawals and outbound money transfers induced a short-lived rally for precious metals, as risk-averse sentiment generated some safe-haven demand.
As the euro slid, however, the dollar soared, which capped gains for gold and silver, eventually pressuring the metals enough to retrace much of the day’s gains.
Today there seemed to be less than expected fears of general instability across the eurozone resulting from the Greek crises, as precious metal values indicated.
"There is still confidence that there will be a deal at the last minute, and if that is not the case, that the ECB (European Central Bank) will step in and make sure there is no contagion," ABN Amro analyst Georgette Boele said as quoted by Reuters. "The dollar is doing relatively well this morning. That's having more of an impact on precious metals, especially gold and silver."
However, with the upcoming referendum that Greek PM Alexis Tsipras called on Sunday, some analysts expect demand for safe-haven assets to pick up.
“Maybe [safe-haven bids] will materialise once we see the impact of a Greek default spreading to other countries in Europe and elsewhere,” Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong said. "Gold price could possibly move sharply after the Sunday referendum."
Indeed, Spanish and Portuguese bond prices fell and their yields rose yesterday, while German yields fell, signalling that cautious behaviour was driving investors.