Gold holds tight range ahead of key Brexit vote, focus on Fed
from cnbc.com
Gold steadied in a tight range on Tuesday as investors adopted a cautious approach ahead of a crucial Brexit vote, while focus shifted to the U.S. Federal Reserve’s stance on interest rate cuts.
Spot gold was steady at $1,484.60 per ounce. U.S. gold futures settled mostly unchanged at $1,487.5.
“Everything is really quiet. The biggest factor, with the Fed looming and Brexit on the horizon, in the U.S. is really company earnings right now,” said Michael Matousek, head trader at U.S. Global Investors.
“People who are trading gold consistently are saying Brexit is going to be a non-event and that’s why gold is not moving. (However,) if this is an incorrect assumption, and it becomes a big event, you are going to see a massive move in gold.”
British Prime Minister Boris Johnson faces two pivotal votes in parliament that will decide whether he can deliver on his pledge to lead Britain out of the EU in nine days’ time.
Lawmakers vote around 1800 GMT on the 115-page Withdrawal Agreement Bill and then on the government’s extremely tight timetable for approving the legislation.
Investors are also awaiting the Federal Reserve’s month-end monetary policy meeting for further clarity on rates cuts this year.
Federal fund futures imply that traders see a 89% chance for a 25 basis-point rate cut by the U.S. central bank in its month-end monetary policy meeting.
However, amid mixed signals from Fed policymakers it is unclear if they, overall, will support a cut.
“There is a great deal of uncertainty on how the Fed is going to behave going forward and that is reflected in people just waiting for some signal,” said Jeffrey Christian, managing partner of CPM Group.
Meanwhile, equities eked out small gains after some upbeat corporate results and talk of progress in the China-U.S. trade.
China and the United States have achieved some progress in their trade negotiations, Chinese Vice Foreign Minister Le Yucheng said on Tuesday.
Those comments came a day after U.S. 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about a deal, while White House adviser Larry Kudlow said tariffs on Chinese goods scheduled for December could be withdrawn if talks went well.
Optimism surrounding the U.S.-China trade is slightly pressuring bullion, said George Gero, managing director at RBC Wealth Management.
Reflecting sentiment, holdings of gold in exchange traded funds tracked by Refinitiv have jumped to their highest since mid-2013.
Elsewhere, silver slipped 0.5% to $17.48 an ounce. Platinum was up 0.3% at $890.50 and palladium was 0.1% lower at $1,756.03 an ounce.