Gold falls as the dollar firms and investors brace for Brexit vote
The markets await vote on Brexit deal later in the day with palladium continuing to trade at premium to gold
Bengaluru — Gold fell on Tuesday as the dollar gained due to weak German economic data weighing on the euro, while investors turned their attention to a parliamentary vote on the British government’s plan to exit the EU.
Spot gold fell 0.2% to $1,289.39 an ounce at 10.55am GMT, while US gold futures slipped 0.2% to $1,289.20 an ounce.
ActivTrades chief analyst Carlo Alberto De Casa said the dollar’s strength was pressuring gold. “Gold is still in a lateral range ... unable to move above $1,300 or fall below $1,276.”
The dollar was bolstered by weakness in the euro, which fell to a five-day low as the continent’s largest economy struggles with weaker global demand and trade disputes.
Also hurting the metal was a recovery in equities, which strengthened after Beijing signaled more supportive measures to stabilise a slowing economy, and emphasised that China is seeking a strong start in the first quarter.
However, the outlook for global growth has been clouded by weak economic data dampening risk sentiment and helping the case for gold over the past few weeks.
“Gold is holding quite nicely near the $1,290 level, which is quite a healthy position,” said Philip Newman, director at Metals Focus. “The fact that prices have held broadly at these levels for quite some time could encourage the physical markets to come back in.”
With the Chinese New Year drawing closer, physical gold is likely to see a boost in demand due to festive buying.
Investors will now focus on Britain’s parliamentary vote on Prime Minister Theresa May’s Brexit policy.
Despite gold having already priced in a widely expected defeat for the British prime pinister, the uncertainty lies in what will happen after the vote, Newman said, adding the “uncertainty could generate some interest in gold in the continent”.
Elsewhere, palladium rose 0.3% to $1,327.50 an ounce. The metal continues to trade at a premium to gold, hovering below an all-time peak of $1,342.43 hit last week.
“We see a sizeable physical deficit in palladium. Fundamentally, demand is also strong,” Newman said, adding that prices could continue to strengthen through 2019.
Among other metals, platinum shed 0.3% to $797 an ounce, while silver fell 0.6% to $15.56.