**NEW YORK ( TheStreet ) -- Gold prices closed flat Monday after investors were uninspired by Greece's debt deal.
The heavy lifting isn't over for Greece, however, as the country now must come to a deal with private bondholders on their bond swap and interest payments on those new bonds. Supposedly this offer needs to be extended by Friday in order to give the creditors time to the review the plan. There is also the question of how many bondholders will agree to the deal and how many will have to be strong armed by Greece. Eurozone finance ministers also have to sign off on Greece's bailout on Wednesday. George Gero, senior vice president at RBC Capital Markets, said that "open interest showed liquidations and short covering rather than new buying and skepticism followed Greek news." "The rise in risk could prompt some profit taking in gold," says James Moore, analyst at FastMarkets.com. "However the metal remains underpinned by good volumes of physical interest with the metal likely to be bolstered by ongoing diversification." On the futures side of things, speculative traders increased long positions by more than 10,000 contracts in the week ending February 7th, while adding almost 4,000 short positions. The sharp increase in long positions, over two weeks they have increased by 34,000 contracts, may leave the metal vulnerable to a short term price correction, predicts James Steel, analyst at HSBC. Martin Murenbeeld, chief economist at Dundee Wealth, thinks that Greece will get its bailout but still gives a 95% probability that Greece will still leave the Eurozone by the end of the year, which means despite a near term relief rally, more trouble for all assets including gold might still be in store. "The threat of the euro's demise perversely causes gold to decline on the back of a stronger dollar and weaker euro," says Murenbeeld. "We think that gold will ... eventually carve out its own path, but we will have to be patient." Oliver Pursche, co-portfolio manager of the GMG Defensive Beta Fund, says that Greece has actually turned into a big distraction. "Every day there is a story about Greece. We took a look at it ... what happens if Greece disappears," he says, "it would impact global GDP by 10 basis points. We need to put it in perspective in how important and meaningful it is." Pursche says the new tranche of aid eliminates the risk of a disorderly default so gold's safe haven appeal might be less alluring but that negative real interest rates, inflation pressures and central bank buying will support higher prices. Pursche is looking at $1,645 of a key support level if gold sells off but that longer term his price target is still unchanged at $2,000 an ounce. "If you are a short term trader the short term trend is down. If you are long term, you hold if you are in it or add to it a little bit." Gold mining stocks were struggling Monday. Kinross Gold (KGC - Get Report) was down 2.48% at $10.51 while Randgold Resources (GOLD - Get Report) was slightly higher at $112.73. Other gold stocks, Agnico-Eagle (AEM - Get Report) and Eldorado Gold (EGO - Get Report) were lower at $34.69 and $13.34, respectively.
-- Written by Alix Steel in New York. >To contact the writer of this article, click here: Alix Steel.