Gold Drops Below $1300 As Brexit Fear Fades


Gold fell on Thursday, breaking below the key technical support of $1,300, as the dollar edged up after UK lawmakers voted against a no-deal Brexit, while gains in European stocks further dented bullion’s allure.

Gold Drops Below $1300 As Brexit Fear Fades - Brand Spur

Spot gold was down 0.8 percent at $1,298.25 per ounce as of 1112 GMT, retreating from $1,311.07 hit on Wednesday, its highest since March 1.

U.S. gold futures also dipped 0.8 percent, to $1,298.40 an ounce.

“It is a combination of factors that have weighed on gold; weak Chinese data that is weighing on industrial demand for the metal, risk-on sentiment, rebounding yields, a higher dollar and stronger UK stocks,” said analyst Fawad Razaqzada.

Growth in China’s industrial output fell to a 17-year low in the first two months of the year pointing to further weakness in the world’s second-biggest economy that is likely to trigger more support measures from Beijing.

European shares rallied to five-month highs after Britain’s parliament removed a key source of uncertainty by rejecting a no-deal Brexit, while the dollar gained against a basket of currencies.

British lawmakers on Wednesday rejected leaving the European Union without a deal and paved the way for a vote that could delay Brexit until at least the end of June.

Britain’s parliament was due to vote later in the day on whether to delay Brexit beyond March 29.

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“Participants on the gold market appear jaded by the Brexit issue and fed up with the whole business,” Commerz-bank analysts said in a note.

On the flip side, gold prices have gained about 13 percent since touching over 1-1/2 year lows in August last year, with recent gains driven by the U.S. Federal Reserve’s patient stance on monetary policy and escalating worries over a global economic slowdown.

Lower interest rates tend to pressure the dollar and increase investor interest in gold, while higher yields reduces the appeal for gold.

Modest inflation figures reinforced views that the Fed would be patient on future interest rate hikes, going into the central bank’s meeting next week.

“I am positive on gold in the near term because central banks recently have turned more dovish than expected, interest rates are going to stay low for longer and there is potential for the dollar to be weaker,”’s Razaqzada said.

Among other precious metals, palladium was down 0.2 percent at $1,552.76 per ounce, while platinum dipped 0.6 percent to $832.39 per ounce.

Silver slipped for the first time in five sessions and was down 1.5 percent at $15.21 per ounce.