Gold price rises as stocks ease on Brexit, tech concerns
London (Oct 23) - Gold firmed on Wednesday as uncertainty over Britain's upcoming exit from the European Union and concerns over a slowdown in the global technology sector weighed on stocks, prompting investors to seek refuge in bullion.
Spot gold was up 0.5% at $1,494.28 per ounce as of 0938 GMT. U.S. gold futures rose 0.7% to $1,497.40 per ounce.
"There is a bit of risk aversion in equity markets and gold is up again after consolidating over last few days. There are some bargain hunters in the gold market, especially as equities are down today," said Julius Baer analyst Carsten Menke.
European shares dipped for the first time this week as a profit warning from Texas Instruments raised worries about the global microchip industry, while UK lawmakers hit the pause button on Brexit.
British Prime Minister Boris Johnson said on Tuesday it was up to the EU to decide whether it wanted to delay Brexit and for how long, after a defeat in parliament made ratification of his deal by the Oct. 31 deadline almost impossible.
Meanwhile, China's Vice Foreign Minister Le Yucheng said on Tuesday said Beijing and Washington have achieved some progress in trade talks.
Tit-for-tat tariffs between both the countries have rattled financial markets and stirred up global recessionary fears.
"The U.S.-China trade truce that was agreed a few weeks ago weighed on a little bit on sentiment in the gold market, but we need to acknowledge that this was more of a paper deal at least for now," Menke said.
"The tariffs and the growth uncertainty remain in place so this is still positive for gold."
Investors are now awaiting the U.S. Federal Reserve's meeting at the end of the month to see if the central bank will cut rates for a third time this year.
David Govett, head of precious metals at Marex Spectron, said financial market players were expecting the Fed to cut rates again.
"So if they don't, it will be short term negative for gold. If they do, it won't be as bullish because it is already written into the markets," he said.
"We're going to see gold make a move back up above $1,500; there's too much going on in the world for it to stay down here."
Elsewhere, silver was up 0.4% at $17.59 an ounce. Platinum rose 0.4% to $894.94 and palladium was steady at $1,755.60 per ounce.
Reuters
