UK parliament voted on Tuesday to reject Prime Minister Theresa May’s Brexit deal by 391 votes to 242 after May said she secured "legally binding" changes to her Brexit deal.
· The high drama over Britain's EU divorce has given gold bugs fresh $1,300 joy.
· Gold Futures for April delivery were up $10.85, or 0.8%, at $1,301.95 per ounce on the Comex division of the New York Mercantile Exchange by 3:00 PM ET (19:00 GMT). It moved up to a near two-week peak of $1,302.40 after the contract settled at $1,298.10, up $7.
· Spot gold, reflective of trades in physical bullion, rose by $8.23, or 0.6%, to $1,301.68 by 3:00 PM ET after a session high at $1,302.09.
· Gold saw stronger bids through Tuesday on Brexit developments. The shiny metal got a boost first on the back of weakness in the dollar as currency traders dumped the greenback against the sterling on initial signs that Britain's exit plan had a chance of succeeding. As the news flow changed direction -- and ended with the "no" vote -- gold continued to see support on safe-haven bets against the U.K. currency.
· Analysts said gold's play in the near term, and chances of sticking at $1,300 levels, will depend on the outcome of May's Brexit plan and how that affects the British pound.
· May said before the vote she would hold a vote on Wednesday on whether to leave without a deal and, if Parliament rejects that, then a vote on whether to ask for a limited delay to Brexit.
· "Depending on what happens next, we could see the mid $1.20s again for sterling over the coming weeks," said Fawad Razaqzada, a London-based analyst with forex.com. "However, a surprise victory for May could trigger a big short squeeze rally with $1.35 being a potential short-term objective."
· Gold was also supported by some soft February inflation data from the U.S., underlining the case for the Federal Reserve to maintain its current wait-and-see stance.
· Speaking last Friday, Fed Chairman Jerome Powell justified the “wait-and-see approach” given that there was “nothing in the outlook demanding an immediate policy response and particularly given muted inflation pressures.”
· Markets remain skeptical that the Fed could hike rates this year, particularly after the employment report suggested weak job creation in February. Fed fund futures suggest a 10% possibility that the next move in rates will be down.
· The pause in policy tightening benefits gold as it lowers the opportunity cost of holding non-yielding bullion.
· Palladium prices rose, reaffirming its standing as the world's costliest metal.
· The spot price of palladium rose by $1.90, or 0.1%, to 1,535.35 per ounce by 3:00 PM.
Reference: Kitco, Investing
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