Gold price firms on Brexit jitters; trade optimism caps gains
London (Oct 22) Gold prices inched higher on Tuesday ahead of a crucial vote by British lawmakers on the Brexit withdrawal agreement, although prospects for a Sino-US trade deal limited the bullion's gains.
Spot gold was up 0.3 per cent at $1,487.98 per ounce as of 0936 GMT. US gold futures rose 0.2 per cent to $1,491.10.
"There is an uncertainty about Brexit and some people realise that there still are roadblocks ahead," said Quantitative Commodity Research analyst Peter Fertig.
"We have a rebound in government bond prices, including in Germany and Italy, which is pointing to a flight back into safe havens," Fertig said, noting declining yields are a supportive factor for gold.
Euro zone government bonds edged down on Tuesday, before a vote in British parliament crucial to determining whether the UK can leave the European Union in an orderly way at the end of the month.
Prime Minister Boris Johnson faces two pivotal votes in parliament on Tuesday that will decide if he can deliver on his pledge to lead the United Kingdom out of the EU in nine days time.
Lawmakers vote at around 1800 GMT on the 115-page Withdrawal Agreement Bill and then vote on the government's extremely tight timetable for approving the legislation.
However capping bullion's gains was optimism induced by talks of progress in the China-US trade negotiations that propped up sentiment for riskier assets.
"The precious metal is waiting for the next big theme or market-moving event that will influence global sentiment and risk appetite," FXTM analyst Lukman Otunuga said in a note.
"Until something fresh is brought into the picture, gold is positioned to trade within a modest range in the short to medium term," Otunuga added.
China and the United States have achieved some progress in their trade talks, Chinese Vice Foreign Minister Le Yucheng said on Tuesday.
Yucheng's comments came a day after US President Donald Trump spoke of optimism about a deal, while White House adviser Larry Kudlow said tariffs on Chinese goods scheduled for December could be withdrawn if talks go well.
Spot gold is poised to break a support at $1,479 per ounce and fall towards the next support at $1,456, according to Reuters technical analyst Wang Tao.
Among other precious metals, silver rose 0.4 per cent to $17.64 an ounce, extending gains for a fifth straight session. Platinum was up 0.2 per cent at $889.27 and palladium was 0.1 per cent higher at $1,760.01 an ounce.
ETnews
