Gold price slips on stronger dollar; political uncertainty provides support

London (Mar 30)  Gold prices inched down on Thursday as the dollar strengthened, but uncertainty surrounding the impact of Britain's departure from the European Union and upcoming French elections offered support.

Gold is witnessing a correction after failing to break above its 200-day moving average around the $1,260 level, analysts said.

"Prices are not likely to witness a big drop particularly because of the Brexit and French elections as they (are offering) very good support for gold at this time," said Brian Lan, managing director at gold dealer GoldSilver Central in Singapore.

Spot gold  was down 0.1 percent at $1,250.66 an ounce
by 0726 GMT. U.S. gold futures         slipped 0.3 percent at
$1,250.
    "Resistance continues to be at $1,260, the 200-day moving
average... $1,240 is a pivotal support in the short term. A
break of $1,240 should see short-term stop-loss sellers
appearing," said Jeffrey Halley, senior market analyst, OANDA.
    Prime Minister Theresa May formally began Brexit - Britain's
divorce from the EU - on Wednesday, declaring there was no
turning back and ushering in a tortuous exit process that will
test the bloc's cohesion and pitch her country into the unknown.
           
    "The market seemed to take the notification of the Article
50 in the UK relatively smoothly, but I suspect the worst is yet
to come on that. We'll see how negotiations develop and the
market is taking the wait and see approach at the moment," said
ANZ analyst Daniel Hynes. 
   "But certainly, there was a tiny bit of safe-haven buying."
    Meanwhile, French centrist Emmanuel Macron is on course to
come out on top of the first round of France's presidential
election next month and go on to win in the May 7 runoff against
far right leader Marine Le Pen, an Elabe poll showed on
Wednesday.            
    The dollar edged up to a nine-day high against a basket of
currencies on Thursday, pressuring gold.      
     A strong greenback makes dollar-denominated gold more
expensive for holders of other currencies, potentially
decreasing demand.
    The dollar was also boosted by Chicago Fed President Charles
Evans, who said he was in line with most of his colleagues in
supporting further rate hikes this year.            
    In other precious metals, spot silver        slid as much as
0.4 percent to $18.15 an ounce, after hitting a four-week high
of $18.25 in the previous session.
    Platinum        rose 0.4 percent to $955.20 per ounce, while
palladium        was down 0.4 percent at $786.93.

Source: Reuters