Gold futures started the week on a positive note amid residual fears and uncertainty facing the European Union following the Brexit vote.
Gold for August delivery on the Comex division of the New York Mercantile Exchange gained $12.40 or 0.9 percent to $1,334.70 per ounce. Trade has ranged from $1,322.20 to $1,340.
Market turmoil persisted today in the aftermath of the UK’s decision to exit the the now 27-member European Union.
The country had been part of the EU for 43 years but more than 17 million British citizens voted to split following issues over immigration and EU regulation.
Conservative Prime Minister David Cameron announced almost immediately that he would step down some time before October after spending months campaigning for the Remain side.
After suffering its single greatest intraday loss, the pound weakened further this morning and was last at 1.3176 against the dollar, down 3.6 percent.
“The resignation of David Cameron leaves Britain without leadership,” Kitco Metals global trading director Peter Hug said. “The feel is one of a bunch of deer caught in the headlights. Maybe if we just stand here, the large object hurtling towards us will zip right past and we can just continue grazing.”
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.
In paper gold, holdings in the exchange-traded funds tracked by FastMarkets rose on Friday at their strongest pace since February and now stand at the highest since August 5, 2013.
In a light US data day, the goods trade balance and the flash services PMI are scheduled for release later today.
Turning to international markets, Germany’s DAX and France’s CAC-40 tumbled 2.2 percent and 2.1 percent respectively while the dollar gained 1.2 percent to 1.0996 against the euro.
As for other precious metals, Comex silver for July settlement increased 6.6 cents or 0.4 percent to $17.855 per ounce. Trade has ranged from $17.660 to $17.935.
Platinum for July delivery rose $7.0 or 0.7 percent to $994.10 per ounce while palladium at $549.25 was up $2.80 or 0.5 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 Mark Shaw)
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Source: Bullion Desk News
