Gold price ticks down, amid reports of deadlocked vote in Brexit referendum
New York (Jun 23) Gold futures inched down amid a broadly weaker dollar, as global equities rose sharply on Thursday, hours before polls closed in the U.K. in the historic Brexit referendum.
On the Comex division of the New York Mercantile Exchange, Gold for August delivery traded between $1,260.00 and $1,274.50 an ounce, before settling at $1,264.85, down 5.15 or 0.41% on the session. At session-lows, Gold fell to near two-week lows. As Brexit fears have abated over the last week, Gold has slid more than 1.5% from 22-month highs hit last Thursday. Despite the mild declines, the precious metal has still surged more than 19% since the start of the year and is on pace for its strongest first half in more than a decade.
Gold likely gained support at $1,199.00, the low from May 31 and was met with resistance at $1,316.40, the high from June 16.
As polls in Britain on the U.K.'s potential departure from the European Union remained virtually deadlocked, investors braced for a long, dramatic night before the official results are released at some point on Friday morning. Complicating matters, torrential downpours in London threatened turnout possibly limiting volume among key undecided voters. Regardless, officials from G7 nations have devised comprehensive contingency plans to calm markets on Friday in the event that the "Leave" campaign prevails.
A Leave vote is widely regarded as bullish for gold, as investors pile into the safe-haven asset due to increased fears that a British departure from the European bloc could trigger a recession throughout the euro zone. Notably, it will take the U.K. a minimum of two years to leave the EU if the Leave campaign prevails.
In the euro area, the FTSE 100 jumped 1.23% to 6,338.10, while the broader Stoxx Euro 600 Index surged 1.47% to 346.34. The strong performance spilled over onto Wall Street, where the major indices were up sharply in U.S. afternoon trading. At 1:00 p.m. EST, the Dow Jones Industrial Average stood at 17,939.10, up 158 points on the session. Meanwhile, GBP/USD traded at 1.4813 (up 0.71%), lingering near seven-month highs. Earlier this week, billionaire investor George Soros warned that the Pound could plummet as much as 20% if the Stay vote is defeated.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.40% to an intraday low of 93.03, falling to fresh one-month lows. The index is down by more than 5% since early-December.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for July delivery gained 0.043 or 0.25% to $17.355 an ounce.
Copper for July delivery jumped 0.026 or 1.24% to $2.162 a pound.
Source: Investing.com
