Gold price steadies as dollar firms, but Brexit concerns support

London (July 7)  Gold steadied on Thursday after rallying to its highest since March 2014 a day earlier on the back of concerns about Britain's vote to leave the European
Union, as strength in stocks and the dollar limited gains.

Financial markets have been extremely volatile since Britain voted on June 23 to leave the EU bloc, knocking equities and pushing some bond yields to record lows. The moves have boosted
the appeal of so-called safe-havens such as gold and silver.
    Spot gold was at $1,363.01 an ounce at 1130 GMT,
little changed from $1,363.51 late on Wednesday. U.S. gold
futures for August delivery were down $2.60 an ounce at
$1,364.70.
    Spot prices reached their highest since March 2014 on
Wednesday at $1,374.91 an ounce but have struggled to maintain
those levels as stocks and the U.S. dollar rose.
    "In the last few weeks we've seen a two-step move. First, we
had the Brexit vote, which led to a rise in safe-haven demand,
and then we saw markets starting to reprice monetary policy
among central banks," Danske Bank analyst Jens Pedersen said.
"We had these two factors working in the same direction for
gold."
    Gold is highly sensitive to rising U.S. interest rates as
they lift the opportunity cost of holding non-yielding assets
such as bullion, while also typically boosting the dollar in
which the precious metal is priced.
    "We have found a level where gold has stabilised," Pedersen
said. "In the short term, I do see a risk that the dollar will
rise further, so that will again cap the upside for gold."
    Traders are awaiting further clues on the outlook for
Federal Reserve policy from Friday's U.S. non-farm payrolls
(NFP) data, seen as a barometer of the economy's health.
    Gold jumped last month after data showed a slowdown in
hiring in May. Another weak reading could indicate that the Fed
will hold off on further rate increases, particularly given the
economic uncertainty following the Brexit vote.
    "The yellow metal continues to feed off global uncertainty,
however, the focus now shifts to Friday's NFP print for an
indication as to whether May's 38,000 result was just an
aberration or a sign of cracks starting to appear in the U.S.
recovery," MKS said in a note.
    Elsewhere, data showed China's gold reserves rose to 58.62
million ounces at the end of June from 58.14 million a month
before.
    Silver was down 0.6 percent at $19.94 an ounce, while
platinum was down 0.6 percent at $1,074.74 an ounce and
palladium was down 0.3 percent at $603 an ounce.

Source: Reuters