(Reuters) - Gold prices were largely unchanged on Wednesday, as investors awaited more clarity on the Brexit issue and the U.S.-China trade war, but a rally in the bond markets provided modest support to the bullion.
Spot gold was up 0.1 % at $1,489.07 per ounce as of 0254 GMT. U.S. gold futures rose 0.3% to $1,492.20 per ounce.
“Things are quiet on the trade war front, while the delay in Brexit is viewed as negative by some. But news is balancing itself and that is keeping the market steady,” said Michael McCarthy, chief market strategist at CMC Markets.
“Prices are swinging between $1,490 and $1,535. Until we break one of those two levels, we really do not a have a direction.”
Asian shares and U.S. stock futures took a hit after British lawmakers rejected their government’s proposed timetable for passing legislation to ratify its deal to exit the European Union (EU).
EU leaders should delay Brexit after Prime Minister Boris Johnson paused legislation on his deal following a parliamentary defeat, EU Council President Donald Tusk said on Tuesday, as Britain spins towards a possible election to break the impasse.
U.S. Treasury yields dropped on Tuesday as investors bought safe-haven debt after UK lawmakers voted against Prime Minister Boris Johnson’s extremely tight timetable to approve his deal for Britain to exit the European Union.
U.S. Treasury and gold are both seen as a safer investment during times of political and financial uncertainty. A rally in bond generally support the yellow metal prices.
On the trade war front, China and the United States have achieved some progress in trade talks, Vice Foreign Minister Le Yucheng said on Tuesday, adding that as long as both sides respected each other, no problem could not be resolved.
The two major economies have imposed a series of tit-for-tat tariffs over the past 15 months that have hit financial markets and stirred up global recessionary fears.
Meanwhile, Federal fund futures imply that traders see a 91.4% chance for a 25 basis point rate cut by the U.S. central bank in its month-end monetary policy meeting.
Indicative of investor interest, SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.5% to 919.66 tonnes on Tuesday from 924.64 tonnes on Monday.
Elsewhere, silver was down 0.2% at $17.49 an ounce. Platinum dipped 0.2% to $889.70 and palladium fell 0.4% to $1,748.69 per ounce.
Reporting by Diptendu Lahiri in Bengaluru; Editing by Subhranshu Sahu and Rashmi Aich