After Greece voted ‘no’ on Sunday to new austerity measures to keep the country receiving financial aid from the European Union and International Monetary Fund, markets’ reactions have not been extreme, with gold initially yawning to the news. Gold, the world’s oldest currency which traditionally rallies on safe-haven appeal, saw a muted start on Monday. It picked up some steam on short covering and bargain hunting midday. August Comex gold was last up $8.90 at $1,172.50 an ounce. What’s holding gold back? The big factor is the currency factor of the strong U.S dollar, says Frank Holmes, CEO of U.S. Global Investors. ‘[W]hat the U.S. dollar pays on real rates of return relative the euro and other currencies around the world, is still so high,’ says Holmes. ‘The thought that the currency is going to get stronger because of rising interest rates, makes the dollar the safe haven currency right now,’ he explains. As Europe continues to give money to Greece, Holmes says that gold should rise dramatically in other currencies.
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