Greece on Tuesday asked for a new bailout (http://www.marketwatch.com/story/greece-asks-for-3rd-bailout-in-last- minute-diplomatic-push-2015-06-30) amid a last-minute diplomatic push to seal some kind of agreement before the country's current rescue deal expires and it defaults on a payment to the International Monetary Fund.

Against that news backdrop, the euro traded lower versus the U.S. dollar (http://www.marketwatch.com/story/euro- narrows-losses-against-the-dollar-2015-06-30) and the U.S. ICE dollar index strengthened, putting pressure on dollar- denominated gold prices.

The only option under which we can see investors buying more gold is if the European Central Bank cuts off the emergency liquidity assistance, said Naeem Aslam, chief market analyst at AvaTrade. This increases the chances of a Grexit to 50% as the banks will be under tremendous pressure to issue some sort of currency IOU, he said.

Under these circumstances, volatility can explode to the upside, pushing gold demand higher as the major risk will be the contagion issue, which "could very well take place in the absence of liquidity in the market or investors losing their faith in the euro," said Aslam.

Gold prices Tuesday likely saw additional pressure from a lack of gold buying, particularly in India, said Chintan Karnani, chief market analyst at Insignia Consultants. "Indian rural buyers are waiting to get a clear picture of monsoon rains before they commit to buy gold," he said.

In other metals trade, October platinum fell $2.80, or 0.3%, to $1,079.50 an ounce, around 10.8% lower year to date, while September palladium rose $6.20, or 0.9%, to $672.65 an ounce, with prices down 15.8% year to date.

September copper fell 1.85 cents, or 0.7%, to $2.615 a pound. Prices were down about 7.5% year to date.

-Myra P. Saefong; 415-439-6400; [email protected]

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