Gold’s rally paused on Tuesday morning in the US amid calmer market conditions, with the selling pressure on international equities and currencies abating.
Gold for August delivery on the Comex division of the New York Mercantile Exchange was last down $9.30 or 0.7 percent at $1,315.40 per ounce. Trade has ranged from $1,308.20 to $1,329.50 so far.
Following the UK’s shock decision to pull out of the EU, gold shot to around a two-year high but today saw a return of some risk-on investment and profit-taking.
After suffering the worst single intraday loss in its history, the pound saw renewed buying this morning while global markets recovered. The FTSE 100 and Stoxx Europe 600 were both last up around three percent.
Still, the precious metal is well positioned due to continued uncertainty facing not only Europe and Britain but also the US. Gold is likely to resume its upward trend on any indication that the UK’s vote to exit is damaging the global economy
“Despite the weakness in gold prices this week, we believe the uptrend will resume sooner rather than later because risk aversion is likely to persist in the coming days due to the inability of central banks to provide credible measures to calm the storm,” FastMarkets metals analyst Boris Mikanikrezai said.
“We would not be surprised by fresh 2016 highs at some point next week or even on Friday this week should the US employment report disappoint for a second straight month,” he added.
Yesterday, European Central Bank president Mario Draghi did not mention the UK’s decision to exit the single market but called for greater policy coordination between world’s economies to combat slow growth and persistently weak inflation
The Brexit vote triggered a major capital exit from the economic bloc, with European banking stocks falling nearly 25 percent at one point – the biggest downturn since the 2012 sovereign debt crisis.
Overnight, holdings in the exchange-traded funds tracked by FastMarkets surged 14.32 tonnes to 1,996 tonnes, the highest since July 22, 2013. Investors have been attracted due to gold’s safe-haven characteristics to protect their portfolios against volatile market conditions.
In data, US final GDP in the first quarter at 1.1 percent was a touch above the 1.0-percent forecast. The final GDP price index at 0.4 percent missed the expected 0.6 percent.
Later, the S&P/CS composite-20 HPI, CB consumer confidence and the Richmond manufacturing index are all slated for release.
Turning to international markets, Germany’s DAX and France’s CAC-40 jumped 2.5 percent and three percent respectively, while the dollar softened by 0.5 percent to 1.1080 against the euro.
As for other precious metals, Comex silver for July settlement ticked up 2.1 cents or 0.1 percent to $17.7565 per ounce. Trade has ranged from $17.550 to $17.805.
Platinum for July delivery edged down $1.90 or 0.2 percent to $977.30 per ounce while the palladium at $560.65 was up $3.25 or 0.6 percent.
(Editing by Mark Shaw)
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Source: Bullion Desk News
