Gold rose above $1,300
Gold futures turned to a second consecutive gain on Wednesday, climbing over $1,300 per ounce, which led to price hikes for their highest month so far.
British Prime Minister Theresa May’ Brexit plan faces a new vote at the end of the session after the revised deal was rejected on Tuesday. Fears of a disorderly exit by the UK from the European Union before the deadline on March 29 to the official leave Europe’s trade bloc helped trigger appetite in haven assets like gold, market experts say.
Gold for April delivery GCJ9, +0.74% rose $10.40, or 0.8%, to trade at $1,308.50 an ounce, with bullion set for a second consecutive advance, which would be its longest since mid-February, according to FactSet data. At its current level, the contract is set for its highest settlement since Feb. 28. Gold-backed exchange-traded fund SPDR Gold Shares GLD, +0.41% also climbed 0.5%.
May silver SIK9, +0.37% gained 7.2 cents, or 0.5%, to $15.485 an ounce.
Late Tuesday, Prime Minister May lost the vote on her revised Brexit deal, as expected, with a margin of 149 votes, although securing last-minute concessions from the European Union over the Brexit divorce deal on Monday. In electronic trading after settlement, gold futures hit highs over $1,302, holding a little higher after the Brexit vote.
Later Wednesday, Parliament will vote whether to rule out a so-called hard, or disorderly, exit from the EU.
“The uncertainty regarding Brexit may have triggered some safe haven buying, but we would argue that the dollar action is the key,” said analysts at Zaner Precious Metals, in a daily note.
“The U.K. parliament has another vote today to decide whether they just leave the EU without a deal in place. A ‘yes’ vote may spark some more interest in the metals, but traders should also be cognizant of the currency effect,” they said. “If the pound gets hit hard, it could support the dollar and pressure gold and silver.”
On Wednesday, the dollar, as measured by the ICE U.S. Dollar Index DXY, -0.20% traded lower by 0.2%, as the British pound GBPUSD, +0.9485% strengthened ahead of the “hard Brexit” vote. A weaker dollar tends support prices for dollar-denominated gold.
Some better-than-expected US economic data on Wednesday did little to support the greenback, even with orders for long-term durable goods in January, which rose 0.4%, an increase for the third consecutive month. Wholesale cost of US goods and services rose slightly in February, with the producer price index rising by 0.1%, but inflation wider showed a small threat to the economy.
Among other metals, May copper HGK9, +0.17% added 0.1% to $2.932 a pound. April PLJ9, +1.49% rose 1.7% to $845.90 an ounce and June palladium PAM9, +1.05% traded at $1,502.10 an ounce, up 0.8%.
“The prospects of an accommodative Chinese monetary policy have boosted the outlook for Chinese auto catalyst demand, which supports palladium,” the Zaner analysts said. “Palladium prices are at historic highs, but this doesn’t seem to be shutting off demand. Palladium is an essential part of automobile pollution control devices.”