Gold little changed as traders focus on Brexit

Bengaluru — Gold prices were steady on Wednesday, as investors awaited more clarity on the Brexit and the US-China trade war, but a rally in the bond markets provided modest support to the bullion.

Spot gold was up 0.1% at $1,489.45/oz, as of 04.41am GMT. US gold futures rose 0.3% to $1,492.50/oz.

“Things are quiet on the trade war front, while the delay in Brexit is viewed as negative by some. But news is balancing itself and that is keeping the market steady,” said Michael McCarthy, chief market strategist at CMC Markets.

“Prices are swinging between $1,490 and $1,535. Until we break one of those two levels, we really do not have a direction.”

Asian shares and US stock futures took a hit after British legislators rejected their government’s proposed timetable for passing legislation to ratify its deal to exit the EU.

Bloc leaders should delay Brexit after UK Prime Minister Boris Johnson paused legislation on his deal following a parliamentary defeat, EU Council President Donald Tusk said on Tuesday, as Britain spins towards a possible election to break the impasse.

US Treasury yields dropped on Tuesday as investors bought safe-haven debt after the UK vote. US Treasury and gold are both seen as a safer investment during times of political and financial uncertainty. A rally in bonds generally support the yellow metal prices.

On the trade war front, China and the US have achieved some progress in trade talks, vice foreign minister Le Yucheng said on Tuesday, adding that as long as both sides respected each other, no problem could not be resolved.

The two major economies have imposed a series of tit-for-tat tariffs over the past 15 months that have hit financial markets and stirred up global recessionary fears.

Meanwhile, Federal fund futures imply that traders see a 91.4% chance for a 25 basis point rate cut by the US central bank at its month-end monetary policy meeting.

Indicative of investor interest, SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.5% to 919.66 tons on Tuesday from 924.64 tons on Monday.

Spot gold is biased to break a support at $1,479/oz, and fall towards the next support at $1,456, Reuters technical analyst Wang Tao said.

Elsewhere, silver was up 0.1% at $17.54/oz. Platinum inched up 0.1% to $891.76 and palladium was steady at $1,754.80/oz. 

Reuters