Gold edged up on Wednesday, as uncertainty about Brexit talks, French elections and U.S. President Donald Trump‘s economic policies boosted safe-haven buying and offset a firmer dollar. Spot gold was up 0.1 percent at $1,252.11 per ounce at 1505 GMT. U.S. gold futures slipped 0.3 percent to $1,251.90.
“There are a lot of uncertainties regarding the Trump reflation trade after the failure last week to overhaul Obamacare, and uncertainty in Europe with French elections coming up and the official start today of Brexit negotiations,” said Carsten Fritsch, analyst at Commerzbank in Frankfurt. “The general picture is still positive (for gold) with dips seen as buying opportunities,” he said.
Prime Minister Theresa May filed formal Brexit divorce papers on Wednesday, triggering years of negotiations that will test the cohesion of the European Union. A firmer dollar capped gains in gold, as it hit a fresh eight-day high after Chicago Fed President Charles Evans said he supported one or two more U.S. rate hikes this year.
“A resurgent U.S. dollar, along with higher U.S. yields and equities has taken the momentum out of the gold rally for now,” said Jeffrey Halley, senior market analyst at OANDA. Strength in the U.S. currency makes dollar-denominated gold more expensive for holders of other currencies, potentially decreasing demand. Independent technical analyst Cliff Green said the gold price would need to take a breather after failing to break above its 200-day moving average at $1,260.