The fallout from the weekend’s European elections continues, with leftist politicians in Greece now attempting to form a new “anti-austerity” coalition government, with one radical-left leaders stating that “the people of Europe can no longer be reconciled with the bailouts of barbarism.” France’s new president Francois Hollande is still insisting that “austerity can no longer be the only option”, but Berlin remains unmoved.

Spain also declared yesterday that it is preparing a bank bailout – a risky political venture considering that the Spanish unemployment rate is close to an eye-watering 25% of the workforce. It’s no exaggeration to say that such economic conditions, as in Greece, carry potentially revolutionary political implications.

The euro sunk to a three-and-half year low against sterling yesterday, while against the US dollar it hit a new three-month low of $1.3020. The Dollar Index gained 0.13% on the day to settle at 79.60, moving further above its 100-day moving average at around 77.00. “Risk off, buy the dollar” being hedge funds’ familiar knee-jerk response to any bad news from Europe.

Stocks and commodities also lost ground, while precious metal prices suffered losses. June Comex gold lost 0.4%, settling at $1,639.10 per troy ounce, with further losses in Asian trading this morning. Silver for July delivery lost 1.4%, while platinum for delivery in the same month lost 0.5%, with the June Palladium contract down 1.5%.

Fear, deflation, “risk off”; whatever you want to call it, these are the dominant market emotions right now, and it’s making it difficult for precious metals – in particular silver – to show the kind of upward price momentum that we’ve become accustomed to in recent years. Absent some kind of imminent game changing central bank intervention, it looks like the metals could be consolidating for a little while longer.