Silver price headed south as Greek parliament debates key reforms

US Federal Reserve Chair testimony in focus

Silver price headed south as Greek parliament debates key reforms

Silver prices were well in the red during midday trade in Europe today, despite continued uncertainty in over Greece and China, which could have seen investors turn to the white metal until market conditions have improved.

Precious metals tend to go up in price in times of economic or political upheaval, as demand for safe-havens grows.

The Greek financial crisis, however, has so far failed to induce any significant uptick. This has a lot to do with the perception that the Eurozone is now much better prepared to deal with a possible Grexit than it was a few years ago, analysts have noted. A worst-case scenario would see Greece leaving the single-currency with speculative pressure transferring to Portugal, Spain and Italy, birthing a much more serious threat to the euro.

Silver futures for September delivery on the COMEX division of the New York Mercantile Exchange had dropped 1.99 percent to $15.010 as of 13:40 BST today. The contract has now lost about three percent since Monday.

"The market is waiting for a trio of reasons: uncertainty over which direction Chinese equities might move in next comes at the same time as the Greek parliament's vote on the latest debt proposal and Janet Yellen's comments later today," Mitsui Precious Metals analyst David Jollie said as quoted by Reuters. "With a degree of short-term uncertainty present in each of the three major markets, investors and other players may wait before deciding to act."

The Greek parliament has until tonight to agree a set of painful legislation in order to secure the critical funding from the Eurozone, as agreed on Monday.

PM Alexis Tsipras faces stiff opposition, both from junior coalition partner, the Independent Greeks, and from within his own Syriza. Reportedly, 107 of Syriza’s 201 central committee members have called for a ‘No’ vote when asked to approve the conditions of a further bailout.

Meanwhile, key officials in Tsipras’ government resigned today, including the deputy finance minister and the general secretary of the economics ministry.

It is expected that Tsipras will have to rely on the opposition to pass the reforms.

Still, investors seem confident that the most difficult period of the crises has passed.

Precious metals traders now eye the upcoming testimony by Federal Reserve chair Janet Yellen before Congress today and tomorrow.

The Fed has said that it intends to raise borrowing costs sometime this year.

CPI data on Friday is also high on investors’ radar. Analysts are projecting a decrease of 0.1 percentage points to 0.4 percent consumer inflation on a monthly basis in June. Core CPI, however, is set to rise 0.1 percentage points to 0.1 percent.

As of 14:52 BST, Wednesday, 15 July, Silver's price is $15.03.

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