Gold is up as updated Brexit deal drags the dollar down
Gold may retest a resistance at $1,301/oz as the market eyes the UK vote on May’s Brexit deal later
Bengaluru — Gold rose on Tuesday as the dollar weakened after the European Commission agreed to amendments to the UK’s Brexit deal, although gains were limited as the agreement also buoyed sentiment for riskier assets.
Spot gold was up 0.2% at $1,296.08 an ounce as of 4.03am GMT, while US gold futures rose 0.4% to $1,295.90 an ounce.
The dollar was down about 0.2% against its major peers, making gold an attractive investment for non-US currency holders, while the sterling rose sharply after the Brexit deal changes.
On Monday, European Commission head Jean-Claude Juncker agreed an updated Brexit deal with British Prime Minister Theresa May to make the agreement more palatable to UK law makers.
“There was a bit of move out of the dollar that lifted gold slightly,” said Kyle Rodda, a market analyst with IG Markets in Melbourne, adding there is also increased risk appetite in the market which is capping gold’s gains.
The updated Brexit deal also boosted Asian shares ahead of a vote in the British parliament on the divorce agreement.
“What would be very interesting to watch in the coming days is how the Brexit talks play out,” said Rodda, adding that a lower chance of the UK crashing out of the EU with no deal will prop up the pound and push down the dollar, supporting bullion.
Gold also found some support from increasing concerns about global growth. US retail sales rose modestly in January, but the recovery was not seen as strong enough to alter the course of a US economy that is losing momentum in early 2019.
On the technical front, gold may retest a resistance at $1,301, a break above which could lead to a gain into the range of $1,307 to $1,313, according to Reuters analyst Wang Tao.
Among other precious metals, palladium was up 0.2% at 1,539.62 an ounce. Silver gained 0.5% to $15.39 an ounce, while platinum dipped about 0.6% to $819.88 an ounce, after touching its lowest since February 19 at $803.50 in the previous session.