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Gold rises to one-week high on Brexit deal logjam

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Reuters BENGALURU

By Swati Verma

BENGALURU (Reuters) - Gold scaled a near one-week peak on Thursday as investors sought cover from market turmoil after Britain's long-awaited draft agreement to leave the European Union was thrown into chaos, helping the metal hold its ground against a rising dollar.

British Prime Minister Theresa May battled to save a draft divorce deal with the EU after her Brexit secretary and other ministers quit in protest and eurosceptic lawmakers stepped up efforts to topple her.

Spot gold was up 0.4 percent to $1,215.33 per ounce at 10:36 a.m. EST (1536 GMT) after touching it highest since Nov. 9 at $1,216.27 earlier in the session and moving away from a one-month low of $1,195.90 hit on Tuesday.

 

U.S. gold futures rose 0.5 percent to $1,215.90 per ounce.

"Uncertainty around Brexit is the biggest factor right now. It's becoming top of the news again," said Michael Matousek, head trader at U.S. Global Investors.

"People are running to the safety of the hard assets such as commodities including gold and crude, and also the dollar ... If gold can hold above the $1,209 level, we could see it rise to $1,235."

The dollar held its gains versus a basket of currencies as data showed a stronger-than-expected increase in domestic retail sales in October. [USD/]

The dollar has emerged as a dominant safe haven asset this year, denting the appeal for gold, which has fallen 11 percent from an April peak, against the backdrop of a U.S.- China trade row and rising U.S. interest rates.

"Geo-political risk remains high ... it should support gold and lead to gains into year-end and in 2019. This is seen in the political turmoil today and increased uncertainty regarding the outlook for Brexit," said Mark O'Byrne, research director of Dublin-based gold dealer GoldCore.

There are signs the trade war could be easing, with U.S. President Donald Trump expected to meet Chinese President Xi Jinping at a G20 summit in Argentina this month.

On the technical front, while gold could test resistance at $1,235 and $1,250 before year-end, it is vulnerable to short-term weakness, he added.

Also indicative of improved appetite for gold, holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, remained near their highest level in more than two months, while central banks have also been gradually increasing their reserves of the metal, analysts said.

Silver was up 0.4 percent at $14.19 per ounce. It fell to $13.85 in the previous session, a level last seen on Jan. 21, 2016.

Platinum was up 0.1 percent at $835 an ounce, while palladium jumped 1 percent to $1,135.49 per ounce.

(Reporting by Swati Verma in Bengaluru; Editing by Susan Thomas)

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First Published: Nov 15 2018 | 9:35 PM IST

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