Gold prices steadied after setting a fresh four week high in European trade on Tuesday as rising political ambiguity in Europe strengthened safe haven demand. The metal, often seen as an alternative investment during times of geopolitical and financial uncertainty, benefited with the Japanese yen and U.S.
Comex gold futures dipped 0.54% to $1,261.29% a troy ounce by 12:58GMT after rising to $1,270.32 earlier, the highest since May 1. Meanwhile, spot gold was at $1,261.70.
Also on Comex, silver was last at $17.27 a troy ounce. It rose to $17.47 in overnight trade, a level not seen since April 27.
Investors’ concern was the Britain’s election, which is a week away, as well as the prospect of early elections in Italy. Also, their worry over the Greek debt, which analysts said supported gold and dented stocks. On Tuesday, a poll in Britain showed Prime Minister Theresa May’s lead over the opposition Labour Party dropping to 6% points head of the general election next week.
Natixis precious metals analyst Bernard Dahdah said "Ideally to see a rally in the (stock) markets the UK would want to see Theresa May win by an overwhelming majority which seems to be less likely to happen taking into account the latest polls".
"If May wins with her current lead it will be slightly negative for her negotiation hand (in Brexit talks) and
... positive for gold."
“The on-going political uncertainty in the market is really driving safe-haven buying at the moment,” said ANZ analyst Daniel Hynes.
Political indecision in Europe also weighed on the world stocks and kept the euro under pressure.
Moreover, shareholders were actually looking ahead to U.S employment report on Friday, which was expected to display that the conditions in the labor market remain strong.
The U.S dollar index slides 0.03% to 97.36.
A solid U.S employment report would pave expectations for a rate increase by the Federal Reserve at its next meeting in June.
Currently, future traders are pricing in around a 80% chance of an increase at the Fed’s June 13-14 meeting.
However, market players are not swayed anymore that the Fed can raise rates two times more this year, with odds for a second increase by December presently at about 35%.
Elsewhere in metals trading, platinum was down 1.91% to $944.50, while palladium added 1.19% to trade at $796.08 an ounce. Copper futures fell 0.23% to $2.560 a pound by 13:59 GMT.
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