Gold price increases as Brexit is due to be triggered on Wednesday
London (Mar 29) Gold edged higher on Wednesday as uncertainty about Brexit talks, French elections and US President Donald Trump’s economic policies boosted safe-haven buying, offsetting a firmer dollar.
Spot gold was up 0.1% at $1,252.35 per ounce at 11.22am GMT. US gold futures slipped 0.3% to $1,252. "The general picture is still positive with dips seen as buying opportunities," said Carsten Fritsch, analyst at Commerzbank in Frankfurt.
"There are a lot of uncertainties regarding the Trump reflation trade after the failure last week to overhaul Obamacare and uncertainty in Europe with French elections coming up and the official start today of Brexit negotiations."
Prime Minister Theresa May was set to file formal Brexit divorce papers on Wednesday, pitching the UK into the unknown and triggering years of uncertain negotiations that will test the endurance of the EU.
Capping gains, however, was a firmer dollar, which pulled away from four-and-a-half-month lows, along with strong technical resistance, analysts and traders said.
"A resurgent US dollar, along with higher US yields and equities has taken the momentum out of the gold rally for now," said Jeffrey Halley, senior market analyst at Oanda.
The metal was also under pressure after failing to break through its 200-day moving average at $1,260, Halley said, posting its second consecutive down day in Asia.
A strong greenback makes dollar-denominated gold more expensive for holders of other currencies, potentially decreasing demand.
Meanwhile, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, which is considered a gauge of investment demand, reported an outflow of 1.8 tonnes on Tuesday. "As for the balance of this week, we think that gold will stabilise and possibly push higher given that Tuesday’s advance in equities did not have much of an impact in slowing its upward momentum," INTL FCStone analyst Edward Meir said in a note.
"In addition, technicals still look constructive, just as physical demand seems to be improving, particularly out of India."
In other precious metals, palladium prices were down 0.3% to $790.47 an ounce, after touching a two-year peak of $815.40 on Friday.
"It seems that demand from the auto industry is still strong," said Fritsch, referring to platinum’s main use for vehicle catalytic converters to curb exhaust pollution. "We’ve seen a pullback, but it found support at $790, so it looks like it’s a consolidation not a stronger correction."
Spot silver slipped 0.1% to $18.14 per ounce.
In the previous session, the metal hit $18.24, the highest since March 2. Platinum rose 0.3% to $951.74 per ounce.
Source: Reuters
