Gold prices edged higher on Thursday after the European Union and U.K. reached a preliminary Brexit deal, with worries that a deal may not pass a weekend vote in the British parliament and signs of a weakness in the U.S. economy providing support for the haven metal.
“Gold’s gains after an initial small sell off suggest that many market participants remain skeptical of this latest Brexit ‘deal’,” and British Prime Minister Boris Johnson’s ability to get both the Democratic Unionist Party in Northern Ireland and the UK parliament to agree to the deal,” said Mark O’Byrne, research director at GoldCore in Dublin, told MarketWatch.
Gold for December delivery on Comex GCZ19, +0.46% climbed by $2.10, or 0.1%, to trade at $1,496.10 an ounce, following a 0.7% decline on Wednesday.
December silver SIZ19, +1.25%, meanwhile, gained 13.8 cents, or 0.8%, at $17.565 an ounce, following a 0.3% gain on Wednesday.
Johnson and European Commission President Jean-Claude Juncker, agreed on a pact that would see an orderly exit for Britain from the European Union. However, Johnson needs parliamentary approval, with a vote set for Saturday that appears unlikely to be greenlighted by legislators.
Doubts about Johnson getting a Brexit deal to pass may continue to support safe haven gold buying, despite anticipation of a Federal Reserve interest-rate cut at the end of this month.
“Gold is seeing buyers emerge and it seems it is only a matter of time before we see another run towards the $1,500 an ounce level,” said Edward Moya, senior market analyst at Oanda, in a daily research note.
Meanwhile, investors digested a batch of mostly weaker-than-expected U.S. data, which could cement expectations for interest-rate cuts from the Fed. The Philadelphia Fed said its gauge of business activity fell to 5.6 in October from 12 in September, with economists polled by Econoday expecting a 7.1 reading and a report on industrial production from the Federal Reserve fell 0.4% in September, marking the biggest drop since April.
Separately, data showed that U.S. housing starts slid to an annual rate of 1.26 million last month from a revised 1.39 million in August, and initial weekly jobless claims increased by 4,000 to 214,000.
Among other metals traded on Comex, December copper HGZ19, +0.12% added 1.5 cents, or 0.6%, to $2.6045 a pound. January platinum PLF20, +0.12% shed 80 cents, or less than 0.1%, to $889.80 an ounce and December palladium PAZ19, -0.37% added 10 cents, or 0.01%, to $1,735.10 an ounce after settling at a record high a day earlier.