Brexit confusion boosts gold

Bengaluru — Gold prices edged up on Tuesday, after hitting a two-week high in the previous session, amid political uncertainty over Brexit and as the dollar held steady.

Spot gold was up 0.2% at $1,259.30/oz, as of 3.57am GMT. In the previous session, the metal touched its highest since June 26 at $1,265.87.

US gold futures for August delivery were nearly unchanged at $1,259.90/oz.

“A stronger yuan and slight weakness in the [dollar] has provided support for gold,” said National Australia Bank economist John Sharma.

“Also, geopolitical issues such as Britain’s confused exit from the EU and US President [Donald] Trump’s assertion that China was impeding North Korean progress on denuclearisation have provided some support for gold.”

The dollar was little changed against a basket of six major currencies on Tuesday after dropping to its lowest since mid-June in the previous session, while the pound was frail after the departure of two key eurosceptic ministers raised concern about a “hard Brexit”.

Britain’s ramshackle exit from the EU could damage economic growth in the eurozone, European Central Bank (ECB) policy maker Ewald Nowotny said.

US President Donald Trump suggested on Monday that China might be seeking to derail US efforts aimed at denuclearising North Korea, but said he was confident that North Korean leader Kim Jong-un would uphold a pact the two agreed on in June.

Investors were also waiting on the sidelines for developments on the trade war front between China and the US, said Dick Poon, general manager, Heraeus Metals Hong Kong.

Meanwhile, hedge funds and money managers raised their net long position in Comex gold by 105 contracts to 4,291 contracts in the week to July 3, US Commodity Futures Trading Commission (CFTC) data showed on Monday.

Silver speculators trimmed their net long position by 11,515 contracts to 10,651 contracts, CFTC data showed. This was the weakest position since January.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF) dropped 0.18% to 800.77 tonnes on Monday.

In other precious metals, silver climbed 0.4% to $16.14/oz.

Platinum gained 0.6% to $851.90 and palladium dipped 0.1% to $959.50/oz.

Reuters