Gold futures edged higher Monday in the US with investors seeking safe-haven assets following the UK referendum, which has adversely affected European and US markets.
Gold for August delivery on the Comex division of the New York Mercantile Exchange gained $1.50 or 0.1 percent to $1,320.90 per ounce. Trade has ranged from $1,320.80 to $1,340.0.
The precious metal has surged the most since the apex of the 2008 financial crisis following the British referendum where a majority of citizens decided to exit the European Union after 43 years.
Investors have sought the safe-haven asset at a record clip with exchange-traded funds tracked by FastMarkets rising on Friday at their strongest pace since February and now stand at the highest level August 5, 2013.
“Britain’s decision to quit the European Union is painting financial markets with a decisive risk-off colour,” Serge Berger, a trader writing for Saxo Bank, said. “But safe-haven assets like gold are getting a boost and barring any dramatic reversal of this initial reaction to the referendum, gold may now be ready for its next leg higher.”
After sufferings its single greatest intraday loss, the pound weakened further this morning and was last trading at $1.3198 against the dollar, down 3.5 percent.
EU leaders will meet today in Berlin, with Germany’s Angela Merkel determined to hold the group together despite growing populist pressures and possible referendums in France and Italy in the near term.
Later, European Central Bank president Mario Draghi will also speak and is likely to address the stability concern of the single market considering the importance of the UK economy to the economic bloc.
Draghi is contending with a massive capital exit, with European banking stocks down 22 percent in the last two days and nearing all-time lows hit during the depth of the sovereign debt crisis four years ago.
Here in the US, growth concerns will only intensify following the Brexit decision. In a press conference last week, Federal Reserve chair Janet Yellen said the ripple effect from European uncertainty could disrupt a fragile American recovery and possibly delay a rate rise.
Following the vote, prediction markets have ruled out higher rates until at least next year, according to CME Group FedWatch.
Meanwhile in a light US data day, goods trade balance for May came in at -60.6 billion, a touch above the forecast of -59.5 billion. Flash services PMI over the same period almost missed expectations with a 51.3 figure, missing the 52.0 economic consensus.
Turning to US markets, the Dow Jones industrial average and S&P were down 1.5 percent and 1.7 percent respectively, while the dollar gained one percent to $1.1018 against the euro.
As for other precious metals, Comex silver for July settlement fell 3.4 cents or 0.2 percent to $17.755 per ounce. Trade has ranged from $17.660 to $17.940.
Platinum for July delivery declined $8.40 or 0.9 percent to $978.70 per ounce while the most-actively traded palladium contract stood at $555.25 per ounce, up $8.80 or 1.6 percent.
“Gold’s strength is buoying silver and platinum prices too, while palladium prices were pulled lower in line with the industrial metals. We would expect choppy trading while the repercussions of the exit vote unfold – there may well be bouts of profit-taking but we would expect dips to be well supported,” FastMarkets’ William Adams said.
(Editing by Tom Jennemann)
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Source: Bullion Desk News
