Gold prices steadied on Thursday 15th November 2018, as the dollar regained the momentum it had lost over the last couple of days.
With the Brexit agreement by Britain thrown into turmoil, investors showed little interests in the gold market, as they sought cover from risky investments after the sudden political fallout.
Spot gold remained unchanged at $1,211.21 per ounce as prices rose by some 1 percent during the previous session. U.S gold future jumped up by some 0.1 percent to reach the price of $1,211.60 per ounce.
The dollar index made a considerable jump, leaving gold bullion as a less attractive option for investors looking to make temporary gains. The jump in the dollar is seen as an immediate repercussion of Britain’s failing Brexit deal with the EU plunging into chaos.
However, the gold market didn’t see an out and out fall, as the market emerged as a safe haven for some investors. Gold has been a traditional store of value during times of economic and political uncertainty, as the stock markets deteriorated. The stock markets suffered the major brunt of the turmoil, while gold survived because of its reputation as a strong safe haven during political crisis of sorts.
“We have seen some resignations from the British cabinet … so that uncertainty is offering some support to gold prices in the immediate term,” said ING analyst Warren Patterson. He further added, “We will find very good support at $1,200 but will struggle to break up above $1,250 in the near term.”
Things took an interesting turn in the deal between the European Union, as two top ministers left the British cabinet. Theresa May announced that she and her team of all top ministers had come to an agreement over the significant terms of the Brexit deal. But, just 12 hours after this announcement, Minister for Works and Pensions Esther McVey and Brexit Minister Dominic Raab quit their positions, saying they didn’t support the draft agreement.
The dollar this year has emerged as a dominant safe haven asset used by investors to safeguard their finances. This has dented the appeal for gold, as the metal has fallen some 11 percent since the peak that was achieved in April.
The ongoing trade dispute between United States and China will also impact currency rates and gold rates as a repercussion. Both Xi Jinping from China and Donald Trump from America are expected to meet each other later this year at the sidelines of a major G20 summit expected to be held in Argentina later this month.
“If prices manage to remain above $1,210 there will be space for further recoveries, while another fall below the psychological threshold of $1,200 would represent a negative signal,” said ActivTrades chief analyst Carlo Alberto De Casa in a note yesterday.
Among other metals, silver saw an increase of 0.1 percent to reach the price of $14.15 per ounce. The metal had previously fallen to its lowest in two years at $13.85 during the previous session.