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Gold firm on Brexit worries despite rally in equities

goldGold prices rose slightly on Monday, underpinned by uncertainty following Britain’s Brexit vote even as equity markets rallied on the back of upbeat U.S. jobs data.


Spot gold, which hit a low of $1,335.68 an ounce in the wake of Friday’sbetter-than-expected U.S. jobs data, rose to $1,374.71 early Monday, just shy of a more than 2-year high of $1,374.91 touched on July 6. Gold was up 0.1 percent at $1,367.60 at 0406 GMT.

U.S. gold was up 0.8 percent at $1,369.50 an ounce, after earlier touching a high of $1,376.50.

“The market is really comfortable with the view that the U.S. Federal Reserve is not going to raise rates in the immediate term despite the positive data, on the back of continued concern in the global markets around the Brexit vote,” ANZ analyst Daniel Hynes said.

“The volatility shows that investor demand is still very strong.”

U.S. job growth surged in June as manufacturing employment increased, more evidence the economy has regained speed after a first-quarter lull, but tepid wage growth could see the Fed remain cautious about hiking interest rates.

Asian share markets enjoyed a relief rally as the upbeat U.S. jobs data lessened immediate concerns about the health of the world’s largest economy, while the long-run fallout from Brexit kept sovereign yields near record lows.

U.S. employers have been adding enough jobs over the last six months to put the economy on track, but that prospect alone is unlikely to get the Fed to step on the brakes with interest-rate hikes.

Lower rates tend to boost gold prices because they cut the opportunity cost of holding non-yielding bullion while weighing on the dollar, in which it is priced.

“July will likely be an unusual month whereby both gold and equity markets could jointly push higher, as the global easing campaign is expected to persist far longer than was believed only a few weeks ago,” said INTL FCStone analyst Edward Meir.

Speculators continued to flock to gold and silver. In gold, they increased their net long position on COMEX for a fifth straight week in the week to July 5, to the highest since records became publicly available in 2006.

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.30 percent to 981.26 tonnes on Friday.

Spot gold may fall towards its July 8 low of $1,335.68 per ounce, as it failed to break a resistance at $1,375, according to Reuters technical analyst Wang Tao.

Silver was up 1.4 percent at $20.55 an ounce, platinum rose 0.2 percent at $1,098.24 and palladium was up 0.3 percent at $616.97.

Source: CNBC


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Reporting Oil and Gas project was launched on 4th June 2009atTakoradi, Western Region, Ghana by Penplusbytes (PPB – www.penplusbytes.org) with the vision of providing a one stop online information and knowledge about Ghana’s oil and gas sector
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