October 16, 2019 / 5:16 AM / a month ago

Gold inches up on Brexit jitters, risk-on mood limits gains

(Reuters) - Gold prices edged higher on Wednesday after shedding nearly 1% in the previous session, on uncertainties surrounding Britain’s negotiations to leave the European Union, while a risk-on sentiment capped the bullion’s gains.

A saleswoman displays a gold necklace inside a jewellery showroom on the occasion of Akshaya Tritiya, a major gold buying festival, in Kolkata, India, May 7, 2019. REUTERS/Rupak De Chowdhuri/Files

Spot gold XAU= was up 0.1% at $1,482.54 per ounce as of 0725 GMT. U.S. gold futures GCv1 were 0.2% higher at $1,486.90 per ounce.

“There are some uncertainties since there is a lot to go through on Brexit. For instance even if both EU and UK negotiators agree on terms it still has to go through the parliament,” AxiTrader market strategist Stephen Innes said.

However, a signed Brexit deal could push yields higher, which fundamentally are significant headwinds over the near term for gold, Innes added.

Higher yields tend to lift the dollar and pressure gold, which costs to store and insure but does not pay interest.

Brexit talks will resume in Brussels on Wednesday morning after “constructive” negotiations that went into the night on Tuesday, a British spokesman said.

Michel Barnier, EU negotiator, had made it clear at a meeting of the bloc’s ministers in Luxembourg that if an agreement could not be reached on Tuesday, it would be too late to send anything for leaders to approve at the summit in Brussels on Thursday and Friday.

Gold also found some support from fresh U.S.-China strains over Hong Kong.

The U.S. House of Representatives on Tuesday passed four pieces of legislation taking a hard line on China, three related to the protests in Hong Kong.

Beijing opposed the new measures and urged lawmakers to stop interfering.

So far the trade negotiations were going well between U.S. and China, but if we see a flip over this issue we might see gold moving up, Phillip Futures analyst Benjamin Lu said.

“Gold is still relatively range bound between $1,474 and $1,510.”

Meanwhile, many Asian share markets held some gains in the wake of Tuesday gains by U.S. and European equities, while the dollar was slightly under pressure against a basket of six major currencies.

Holdings in SPDR Gold Trust (GLD), the world’s largest gold-backed exchange-traded fund, fell 0.22% to 919.66 tonnes on Tuesday.

Among other precious metals, deficit-hit palladium XPD= rose 0.2% to $1,736.39 an ounce, hovering near its record high of $1,739.93 hit on Tuesday.

Silver XAG= dipped 0.5% to $17.29 per ounce and platinum XPT= slipped 0.7% to $882.49.

Reporting by Eileen Soreng and Karthika Suresh Namboothiri in Bengaluru; Editing by Shounak Dasgupta and Louise Heavens

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