Gold price edges down as investors await clarity on Brexit
London (Oct 24) Gold inched down on Thursday as investors awaited clarity on Brexit after the European Union delayed a decision on granting Britain an extension, while a weaker dollar provided a floor under prices.
Spot gold fell 0.2 per cent to $1,488.58 per ounce as of 0725 GMT. US gold futures lost 0.3 per cent at $1,491.30 per ounce.
With EU members delaying their decision on whether to give Britain a three-month Brexit extension, Prime Minister Boris Johnson said if the deadline was deferred until the end of January he would call an election by Christmas.
"Even if Brexit goes through, there are enough geopolitical uncertainties to keep gold supported for the next two to three years," said Hareesh V, head of commodity research at Geojit Financial Services.
"The dollar (index) has corrected from the 99.5 level to 97.2 on a continuous basis for the last two weeks. That is providing some support to prices," he said.
The dollar index, which measures the greenback against a basket of other currencies, was down 0.1 per cent at 97.396, on track for its second straight session of losses.
Markets have been volatile for months due to geopolitical uncertainties such as the US-China trade war, Brexit, Hong Kong protests and tensions in the Middle East.
Non-yielding bullion is often seen as a safer investment during political and financial turmoil.
OANDA analyst Jeffrey Halley pointed to a lot of stale long positions and said a breakdown through $1,460.00 was likely to prompt more long-term holders to unwind positions to lock in profit.
Market participants await European and US manufacturing data due on Thursday to gauge the health of the global economy, and a European Central Bank meeting, with no policy change expected at President Mario Draghi's last at the helm.
Investors also await the US Federal Reserve's meeting on Oct. 29 and 30, at which it is expected to cut its benchmark interest rate.
Asian shares pulled ahead as corporate earnings and a ceasefire in northern Syria helped lift sentiment, though the US-China trade spat and Brexit prevented a decisive shift towards riskier assets.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.13 per cent to 918.48 tonnes on Wednesday from 919.66 tonnes on Tuesday.
Silver fell 0.4 per cent to $17.49 per ounce. Platinum was up 0.6 per cent at $920.74 per ounce after scaling a more than three-week high, while palladium rose 0.6 per cent to $1,752.53 per ounce.
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