Latest developments in Greece don't seem to be impacting gold in any meaningful way, certainly not in the same fashion that the market has reacted in the past, notes UBS.
"This brings into the forefront discussions around the change in gold's reaction function towards uncertainty. In a note we published earlier in June, we highlighted that several factors have contributed to this change. One of the factors that has altered gold's response to risk is that there has been a general 'desensitisation' in the market over the last few years," UBS adds.
"There is an element of headline fatigue - in a sense, the threshold for bad news is higher and it will probably take a lot more to trigger a significant wave of gold safe haven buying. Unless there is a rapid deterioration in the situation in Greece in the coming days and weeks, it's difficult to see gold having a more notable reaction," UBS argues.
"This deterioration would probably come in the form of something similar to what our colleagues in Macro Strategy describe as the worst-case scenario, whereby 'Grexit' occurs and there is no credible policy response," UBS adds.
UBS house view currently puts the probability of Greece exiting the Eurozone at 40% and the probability of contagion at 40%.
That's via eFX.
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