The Daily Market Report: Gold Slips as Optimism for Greek Deal Rises

23-JUN (USAGOLD) — Growing optimism that a deal will be struck between Greece and its creditors continues to weigh on gold. The yellow metal has retraced most of last week’s gains, but activity remains confined to last week’s range.

Despite the rising hopes, some reports suggest that the IMF remains dissatisfied with the latest proposal. There is also considerable concern that even if an accord is reached, the Greek government won’t be able to get it passed through parliament before the June 30 deadline is reached. That could still result in a technical default.

Even being optimistic though, release of the final tranche of the bailout funds will allow Greece to make upcoming payments of the previous bailout funds through the end of August. It’s a very short kick-of-the-can down the road.

In raising taxes and pension contributions, Greece may be hard-pressed to reach their budget surplus targets. What happens then? Does the deal become null-and-void, requiring immediate repayment? Good luck with that.

A CNNMoney article calls the proposal “deeply flawed,” as it would allow Greece to make the impending payment to the IMF, but does very little — if anything — to address the underlying causes of the crisis. That will make for a bigger crisis down the road . . . a very short road.