Gold futures extend losses as Brexit fears recede
New York (Jun 20) Gold futures headed lower for a second-straight session on Monday as growing expectations that the U.K. will remain part of the European Union lifted investors’ appetite for riskier assets and prompted a rally in global stock markets.
Gold for August delivery GCQ6, -0.38% slumped $6.60, or 0.5%, to $1,288.20 an ounce, extending Friday’s 0.3% loss. Still, last week marked a third-straight week of gains for the metal.
“Gold is more likely to trade lower ahead of the Brexit vote given its strong rally over the last few weeks,” said Michael Armbruster, principal and co-founder at Altavest.
On a technical trading level, he said that key support levels for the December Gold contract GCZ6, -0.35% are near $1,280 and $1,250 respectively. December gold currently trades above $1,294.
“Gold bugs looking to get long may get an opportunity to buy near these levels,” he said. “The big picture for gold is still quite bullish as real interest rates remain negative nearly everywhere, including here in the United States. We look for gold to make another push higher after the Brexit vote.”
The U.K. abandoning the European trade bloc is viewed as potentially disruptive for global markets and therefore a boon for gold prices as investors retreat to haven assets and away from those perceived as risky.
But polls out over the weekend showed those likely to vote in favor of leaving the U.K. have lost some ground, with several surveys now putting the “remain” camp in the lead.
Read: Brexit polls show increased support for the U.K. ‘remain’ camp
During a televised program on Britain's upcoming vote on whether to remain in the European Union, an audience member compared Prime Minister David Cameron to the British leader who tried to appease Adolf Hitler to avoid war. Photo: BBC News
A slight tilt in favor of the remain camp follows the death of British politician, Jo Cox, who was shot and stabbed last Thursday by a man yelling “death to traitors, freedom for Britain.”
The U.K. will hold its in-or-out referendum Thursday to decide whether Britain will exit the EU.
“Clearly this is helping calm the financial markets again somewhat, as a result of which gold is currently in less demand,” analysts at Commerzbank said in a Monday note.
“That said, the referendum will doubtless be the dominant theme this week. In our opinion, the uncertainty over the outcome of the vote should lend support to gold,” they added.
Elsewhere in the metals spectrum, July silver SIN6, +0.54% edged up by 7.9 cents, or 0.5%, to $17.49 an ounce, while copper for the same month HGN6, +2.02% rose 4.3 cents, or 2.1%, to $2.094 a pound.
Platinum for July PLN6, +2.22% gained $20.60, or 2.1%, to $986.70 an ounce and palladium for September PAU6, +3.63% added $18.95, or 3.6%, to $548.60 an ounce.
Among exchange-traded funds, the SPDR Gold Trust GLD, -0.91% lost 1%, while the iShares Silver Trust SLV, +0.06% traded nearly flat.
Source: MarketWatch
