The global bullion market is now looking at Greece for a further boost to lift its spirit as officials from the International Monetary Fund (IMF) conduct a fiscal checkup required before the country gets its second loan instalment in mid-September.
Gold market is expecting some bad news from Greece IMF test so that the bullion prices can ride another safe haven wave in the coming days. Gold prices have been on the decline during the past few days due to positive signs emerging from the Euro zone and US economies.
Officials from the European Union and European Central Bank will also take part in the inspection and are due to remain through August 6.
Debt-ridden Greece narrowly avoided bankruptcy in May and was pledged up to euro110 billion ($142 billion) in rescue loans from the IMF and the 15 other EU countries using the euro.
If the Greece economy gets that money without ay hitch, the markets across the globe will get a boost whereas gold will lose its sheen a bit as the panic buying will cease.
Gold prices heavily depend on the safe haven demand in the market now. Following the Portugal economic fall, gold had reached a record above $1,200 per ounce level. But, it failed to sustain that level for long and began its slide last week with more and more positive news emerged from the European markets.
Greece narrowly avoided defaulting on its sovereign debt when it was injected with an initial rescue payment of €20bn in May. But under the exacting criteria of the EU and IMF-sponsored package, further cash injections will depend on headway made in enforcing the austerity plan.
The visiting mission of experts from the EU, ECB and IMF are expected to urge the ruling socialists to expedite legislation that will increase the economy's notoriously low competitiveness by opening closed-shop professions and privatising loss-making utilities.
Over the weekend the Greek media reported that pressure was growing for the closure of much of the nation's railway network, which loses up to €2.5m a day.
Draconian budget deficit cuts aimed at saving €30bn by 2014 have ranged from a clampdown on state spending, repeated VAT hikes and cuts to civil servants' pay and pensions. The verdict, so far, appears to be good. This month Greek optimism was reinforced by an interim IMF report that noted the considerable progress the country was making in putting public finances on a sustainable path. In a similar report, the EU commission said that Athens' ambitious goal of cutting the budget deficit from 13.6% in 2009 to 8.1% by the end of this year was 'generally on track'.