Gold price is little changed as traders await outcome of May’s no-confidence vote

January 16, 2019

Singapore (Jan 16)  Gold held steady on Wednesday, supported by a slight retreat in the dollar while gains were capped by a modest recovery in equities, as caution set in ahead of a no-confidence vote on British Prime Minister Theresa May’s government.

Spot gold was unchanged at $1,289.01/oz at 11.01am GMT, while US gold futures were little changed at $1,288.80/oz.

Gold seems to be finding a hurdle at $1,300, said Commerzbank analyst Carsten Fritsch, adding that physical demand for gold coins had picked up in Britain, aided by Brexit uncertainty.

“Stock markets have recovered and the pricing in of the US Federal Reserve rate hike has almost ended. Political uncertainty remains and that does not seem enough to push gold past $1,300.”

Stock markets stabilised after strong volatility at the end of 2018, drawing solace from the resumption of China-US trade talks.

British opposition Labour Party leader Jeremy Corbyn called a vote of no confidence in May’s government, to be held at 7pm GMT, after her Brexit deal was defeated by MPs on Tuesday.

The date set for Britain’s departure from the EU is March 29, but with the deadline approaching quickly, markets anticipate a likely extension.

The increased likelihood of a disorderly Brexit and the extension of a partial US government shutdown have helped keep gold well supported near a more than six-month high of $1,298.42 hit on January 4.

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Markets betting that the US Fed will slow its interest rate hikes also kept afresh the precious metal’s appeal.

Gold has, however, not seen a big impact from Brexit developments thus far, said Natixis analyst Bernard Dahdah, adding that “we will have to wait and see if it’s going to be a disorderly Brexit or not”.

“Generally speaking, the impact of Brexit hasn’t been as large on the price of gold as people thought it would be. It’s the dollar that’s still the main driver behind the prices of gold.”

Spot gold remains neutral in a range of $1,285/oz-$1,299/oz, and an escape could suggest a direction, Reuters technical analyst Wang Tao said.

Among other precious metals, palladium rose 0.8% to $1,328/oz.

Platinum gained 0.3% to $796.

Silver shed 0.1% to $15.57/oz.


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