by Dalton Barker
Gold futures drifted lower on Thursday morning in the US although market direction rests on the UK’s vote on whether to leave or remain with the EU, the result of which won’t be known till later tonight.
Gold for August delivery on the Comex division of the New York Mercantile Exchange dipped $6.70 or 0.5 percent to $1,263.30. Trade has ranged from $1,259.90 to $1,274.90 so far.
Although monetary programmes in the US, Europe and Japan will be the driving force over the longer term, gold investors are focused on the results of today’s election.
“The bearish argument that gold may be overbought in the near term and that the bullion price needs to correct, or the bullish argument that the Fed’s reluctance so far this year to raise interest rates is bullish, does not matter at the moment,” HSBC analyst James Steel said. “But after gold reacts to the results of the vote, the market’s attention may turn to these and other issues.”
Fresh polls show an even race after months of contentious debate despite top officials in the Labour and Conservative parties championing the ‘Remain’ platform.
The result is not expected eased until early Friday morning UK time, which could keep liquidity low over the Asian market open. But activity could spike from tomorrow especially if the ‘Leave’ campion emerges victorious.
“Gold prices could get increasingly volatile tomorrow after the vote,” FastMarkets William Adams said. “A ‘remain’ vote will no doubt see short term profit-taking but a ‘leave’ vote may well have longer-term bullish consequences – it would open up a new chapter for Europe.”
In data today, US unemployment claims for June 10-17 at 259,000 ere better than the forecast 271,000 and below the psychological 300,000 mark. Earlier, the EU released flash services and manufacturing PMIs – the overall flash services number undershot at 52.1 while the manufacturing PMI outperformed at 52.6.
Later in the US, the flash manufacturing PMI, new home sales, the CB leading index and natural gas storage are all slated for release.
Turning to international markets, Germany’s DAX and France’s CAC-40 were each up 1.7 percent while the dollar fell 1.1 percent to 1.1403 against the euro.
As for other precious metals, Comex silver for July settlement was little changed at $17.315 per ounce. Trade has ranged from $17.215 to $17.500.
Platinum for July delivery declined $12.40 or 1.3 percent to $971.10 per ounce while the most active palladium contract at $561.75 was down 50 cents or 0.1 percent.
(Editing by Mark Shaw)
