The spot gold price inched lower during Asian trading hours on Tuesday as the sterling recovers after hitting a fresh 30-year low on Monday.
Spot gold was last at $1,319.10-1,319.50 per ounce, down $5.10 from Monday’s close. Trading ranged at $1,318.53-1,326.30 so far.
The British pound fell to a new 30-year low of $1.3122 against the US dollar on Monday after Standard & Poor’s downgraded the UK’s credit rating. It was last at $1.3325 on Tuesday, up 0.78 percent from Monday’s close.
S&P stripped Britain off its last remaining triple-A credit rating on Monday adter it cut its rating by two notches to ‘double-A’. Moody’s had rated the UK at Aa1 but changed the country’s rating outlook to negative from stable, while Fitch Ratings reduced its UK rating one notch to ‘AA’.
But analysts generally see the yellow metal well-supported as investors’ risk appetite wanes following Britain’s vote to exit the European Union.
Gold should remain well-bid in this post-Brexit risk-off environment, said ANZ Research on Tuesday morning.
The UK Brexit vote has triggered a backward shift in US interest rate expectations – markets are now pricing in just one 25-basis-point rate increase this year and possibly even a cut at the July meeting, which is bullish for gold, said James Moore, research analyst at FastMarkets.
“Risk aversion and the backward step in US-interest-rate expectations continued to support gold but the scale of speculative length leaves gold somewhat vulnerable if investors return to risk assets or seek to crystallise profits to offset losses/margin commitments elsewhere,” he noted.
In other commodities, the Brent crude spot price rose 0.4 percent to $47.67 per barrel, and the Texas light sweet crude spot price increased 0.3 percent to $46.84 recently on Tuesday.
In equities, the Dow Jones Industrial Average closed 1.5 percent lower at 17,140.24 on Monday. The Shanghai Composite is down 0.4 percent to 2,883.99 so far on Tuesday.
In currencies, the US dollar index is down 0.32 percent to 96.15 recently on Tuesday.
In US data released Monday, 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.
US data due later on Tuesday includes the final GDP, final GDP index, S&P/CS Composite-20 HPI, CB consumer confidence and Richmond manufacturing index.
In other precious metals, silver decreased $0.075 to $17.65/17.67. Platinum rose $4 to $976/986, and palladium gained $4 to $556/561 recently on Tuesday.
On the Shanghai Futures Exchange, gold for December delivery was unchanged at 284.05 yuan per gram and December silver was flat at 3,899 yuan per kilogram.
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Source: Bullion Desk News
