Gold firms as dollar wilts on amended Brexit deal

Published 23 Hours AgoUpdated6 Hours AgoReuters Getty Images

Gold edged higher on Tuesday, supported by a retreat in the dollar after an apparent breakthrough in Brexit negotiations between the European Union and Britain, although rallying equities capped bullion's gains.

Spot gold rose 0.36 percent to $1,298.61 per ounce, while U.S. gold futures were up 0.6 percent at $1,299.10.

Some dollar weakness emerged due to the Brexit talks, in turn providing short-term support to gold prices, Capital Economics analyst Ross Strachan said.

The dollar fell from near three-month highs hit in the previous session, making bullion cheaper for holders of other currencies.

Capping gold's rise, last-minute tweaks to Britain's arrangement for leaving the EU triggered gains in global stocks, having soothed investor worries about a possible no-deal exit.

British lawmakers were preparing to vote on a divorce deal at around 1900 GMT after Prime Minister Theresa May won fresh assurances from the EU.

"However, if the deal is voted through this time and risk appetite increases as a result, gold is likely to come under pressure again," Commerzbank analysts wrote in a note.

The yellow metal has recently found some support from increasing concerns about global growth, briefly rising above $1,300 on Friday. Weak U.S. jobs data and modest retail sales in January were seen as signs of a U.S. economy losing momentum.

Investors were now focused on the U.S. consumer price index due at 1230 GMT and on U.S.-China trade negotiations.

Gold could rise to $1,400 by the end of 2019, with global growth concerns a factor underpinning the advance, Strachan said.

"We expect equity markets to move significantly lower and gold's safe-haven properties to come into play."

Reflecting investor sentiment, holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.4 percent to 769.53 tonnes on Monday.