Published: Fri, March 15, 2019
Economy | By

Gold Inches Up Close To A Two-Week High Amid Brexit Woes

Gold Inches Up Close To A Two-Week High Amid Brexit Woes

Gold fell on March 14 as the dollar regained some ground and uncertainty over Brexit eased, but the metal held close to a two-week high hit in the previous session as tepid USA inflation data cemented expectations that the Federal Reserve would hold rates.

Gold bars at the Austrian Gold and Silver Separating Plant "Oegussa" in Vienna, Austria, March 18, 2016.

Reflecting investor sentiment, holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.4 percent to 769.53 tonnes on Monday.

"It is a combination of factors that have weighed on gold; weak Chinese data that is weighing on industrial demand for the metal, risk-on sentiment, rebounding yields, a higher dollar and stronger United Kingdom stocks", said analyst Fawad Razaqzada.

Spot gold rose 0.4 per cent to $US1,298.63 per ounce, while USA gold futures settled 0.5 per cent higher at $US1,297.70.

The dollar index.DXY drew strength from a subdued pound ahead of a parliamentary vote, expected to call for a short delay to Brexit, later in the day. Alternatively, if they reject to leave the European Union without a deal, then Brexit should be delayed.

"Participants on the gold market appear jaded by the Brexit issue and fed up with the whole business", Commerzbank analysts said in a note.

Lower interest rates tend to pressure the dollar and increase investor interest in gold, while higher yields reduce bullion's appeal.

"We have seen that play out again now", Cooper added.

However, analysts said demand for the metal may soon increase on expectations that the U.S. Federal Reserve would refrain from raising interest rates after their policy meeting next week.

"We expect the Fed to remain on hold, and other major central banks to hike less and/or later". On the technical front, "gold is now heading towards the next potential resistance around $1313, a former support level", said analyst Fawad Razaqzada.

Silver slipped for the first time in five sessions and was down almost 2 percent at $15.15 per ounce.

Among other precious metals, palladium climbed 0.9 percent to $1,555.01 per ounce, while platinum rose 0.1 percent to $838.

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