Gold futures caught a modest bid in the US on Tuesday after the pound, stocks and oil fell sharply when the post-Brexit risk-on rally ran out of steam.
Gold for August delivery on the Comex division of the New York Mercantile Exchange was last up $11.10 at $1,350.10 per ounce. Trade has ranged from $1,338.50 to $1,360.30 so far.
“Safe-haven buying in the wake of the UK’s vote to Brexit the EU continues to drive precious metals higher. There looks to be plenty of momentum behind silver’s move higher in particular as it continues to outperform gold,” IG market analyst Angus Nicholson said.
Comex silver for September delivery was up 24.7 cents at $19.835 per ounce but earlier the metal was up nearly eight percent at $21.225, which was biggest single-day surge since September 2013.
“Silver’s outperformance of gold has been evident all year, with silver’s year-to-date return almost double that of gold. This may partly be down to silver’s greater exposure to the industrial sector,” Nicholson said.
“In the wake of Brexit, expectations for looser monetary policy globally have driven a lot of flows, but we have also seen a rise in fiscal stimulus expectations as central banks increasingly look tapped out,” he added.
Meanwhile, in wider markets, the pound was last down 1.29 percent at 1.3118 against the dollar while light sweet crude (WTI) oil futures were off $1.45 or 2.96 percent at $47.54 per barrel.
In equities, Germany’s DAX and France’s CAC 40 were down 1.87 percent and 1.82 percent respectively.
As for the other precious metals, platinum futures for October delivery on the Nymex was were up $5.00 at $1,062.10 per ounce while the palladium at $598.15 was down $7.50.
Economic data flow resumes today – there are widespread global services PMIs throughout the session. Already, China’s Caixin PMI data shows the country’s service sector picking up: the reading came in at 52.7, up from 51.2. In Europe, the Spanish, French and German readings for June were all as expected or better. The EU indicator was 52.8 against an expected 52.4.
Later today, there are figures on factory orders and economic optimism from the US and, additionally, the UK BoE stability report and statement from the British central bank’s governor has the potential, given the aftershock of the Brexit vote, to affect wider financial markets.
From mid-week onward, attention will turn towards the US employment scene, building up to Friday’s non-farm payrolls figures for June.
(Additional reporting by Martin Hayes, editing by Mark Shaw)
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