Gold edges higher after Greek vote

Safe haven demand eroded today after the Greek parliament approved a crucial austerity bill, but gold rose as the US dollar fell against other major currencies.

The three day long debate in the Greek parliament over the next round of austerity measures concluded today with the lawmakers voting in favour of imposing another round of austerity measures to save the budget €28 billion.

The bill was passed in spite of a wave of mass demonstrations against the budget cuts that has swept across the country. The protests turned violent ahead of the cote, forcing the police to use tear gas to disperse the crowds.

The approval of the austerity package makes it likely that Greece will receive the next €12 billion payout from the European Union and the International Monetary Fund (IMF), which is seen as its only hope to remain solvent. A debt default by Greece could do severe damage to the European economy and cause another financial meltdown.

As concerns over Greece’s fiscal problems were subdued, the euro rose against the US dollar to give gold enough support to stay above the key US$1,500/oz level.

Gold is seen as an alternative asset and has an inverse relationship with the US dollar.

Gold traded at US$1,507/oz in late afternoon London time. Silver and platinum climbed to US$34.40/oz and US$1,718/oz respectively.

Randgold Resources (LON:RRS) climbed 2 percent, while other precious metal miners in the FTSE 100 were broadly flat at midday. Midcap gold miner Petropavlovsk (LON:POG) advanced 1.7 percent in afternoon trade.

Anglo Asian Mining (LON:AAZ) surged 10.5 percent to emerge among the top performing small caps.