Gold Price Plunged on Day but Up on Week ahead of Brexit Vote
Gold price gain but safe-haven shareholders and traditionally long yellow metal mostly sat out on Friday. It let prices dive with few leads to chase, ahead of a weekend parliament vote on the U.K. bid to leave the EU.
Gold dipped in later hours, after an early increase in the day on the prospects that Britain’s Brexit hopes, and U.S.-China trade agreement bound again. Also, on signs that fewer central banks all over the world might go up on easing.
U.S. gold futures for December delivery ended down $4.20, or 0.3%, at $1,494.10 per ounce.
Spot gold, which tracks live trades in bullion, was below just 30 cents at $1,491.59.
For the week, both bullion and futures posted a minor gain, though they stayed under the key $1,500 bullish line.
Moreover, the market strategist says that gold traders can feel the lack of emotion in the markets these days. Also, buying interest continues to run dull. He also added that the expectation for weaker economic data and the current level of central bank response seems to factor at the current price. He suggested that gold traders need a new catalyst.
On Sunday, the strategist cautioned against taking major positions ahead of a “binary” Brexit event. This is when the U.K. House of Commons votes on Prime Minister Boris Johnson’s EU Withdrawal Agreement.
Breaking reports suggest that the enemy of the bill crafted an amendment that would force the government to pursue a three-month extension to the Brexit deadline. This is a time that they hope would expose what they see as the bill’s shortcomings. Also, a poll by research firm recommends U.K. voters support the deal by a margin of 2:1.
Gold Prices on Global Central Bankers
Global central bankers were cool on rate cut prospects.
Philip Lowe says recent rate cuts were working extreme monetary policy measures. These are negative interest rates and quantitative easing, which are “extraordinarily unlikely.”
Bank of England Deputy Governor put the anticipation of rate hikes back, but only if the U.K. leaves the EU smoothly with a transitional deal. Ramsden said that Brexit uncertainty damaged the supply capacity of the British economy. Also, it lowered the rate at which it can grow without generating inflation in the future.
Two officials of the Federal Reserve made clear their lack of interest just before the U.S. central bank entered its “quiet period.” Furthermore, the Fed is due to meet between Oct 29 and 30. There are beliefs it will approve a third straight quarter-point cut for gold this year.
Dallas Fed President said the Fed’s two cuts so far this year don’t depict the start of a “full-fledged rate cutting cycle.”
Kaplan said he expected strong consumer demand to keep sustaining the U.S. economy. It is through a soft patch in business investment caused by trade uncertainty.
George says weakness in manufacturing and business investment is evident. Also, it is not clear that monetary policy is the appropriate tool to offset the risks faced by businesses in those sectors. Besides, it weighed against the costs that could associates such actions.