Gold inched higher on Tuesday, supported by global political uncertainties, after touching a five-week low earlier in the session as a key US Federal Reserve official reaffirmed its hawkish stance on interest rate hikes. Risk aversion due to Brexit, concerns over US President Donald Trump’s ability to carry out financial reforms, election results in Europe and Middle East turmoil has provided some support for gold, said Mark To, head of research at Hong Kong’s Wing Fung Financial Group. “We can see things are getting more complicated and investors have to take some time to put things into context,” To said. Spot gold rose 0.2 percent to $1,244.76 per ounce by 0431 GMT.
US gold futures were nearly flat at $1,246.60 Spot prices touched a low of $1,242.61 an ounce early in the session, the weakest since May 17, after New York Fed President William Dudley reinforced that recent weak data is unlikely to derail plans to keep raising interest rates. Gold is used as an alternative investment during times of political and financial uncertainty.
British and EU Brexit negotiators agreed how to organize talks on Britain’s divorce at a first meeting in Brussels on Monday, where both sides stressed goodwill but also the huge complexity and tight deadline. Late Monday, Chicago Fed President Charles Evans said it may be worthwhile for the U.S. central bank to wait until year-end to decide whether to raise rates again and that it should move slowly to raise them and trim its massive bond portfolio.
Spot gold may break a resistance at $1,248 per ounce and rise towards the next resistance at $1,251, as it failed to break a support at $1,243, according to Reuters technical analyst Wang Tao. After having broken through the 100-day moving average, the 200-day moving average could be the next significant support for gold, said OANDA analyst Jeffrey Halley. “A daily close below here suggests we could target the May lows.”
Among other metals, spot palladium rose 0.3 percent to $862.53 per ounce, and platinum fell 0.1 percent to $921.40 per ounce Silver rose 0.7 percent to $16.56 per ounce. In the previous session, it touched $16.44, its weakest since May 18.