Investing.com - Gold prices moved higher on Tuesday as uncertainty over the U.K.’s departure from the European Union supported safe haven demand while U.S. inflation data for February did nothing shake the Federal Reserve’s promise to remain on hold.
At 08:50 AM ET (11:50 GMT), gold futures for April delivery on the Comex division of the New York Mercantile Exchange rose $7.75, or 0.6%, to $1,298.95 a troy ounce.
U.K. Attorney-General Geoffrey Cox said that last-minute changes to the withdrawal agreement hammered out by the U.K. and EU hadn't removed the risk of trapping the U.K. in a customs union with the EU via a mechanism designed to avoid a hard border in Ireland. As such, hard-line Brexiteer lawmakers are unlikely to vote for the agreement in parliament again, making it a near-certainty that the vote will fail.
If lawmakers vote down May's deal, she has promised a vote on Wednesday on whether to leave without a deal and, if they reject that, then a vote on whether to ask for a limited delay to Brexit.
The uncertainty spurred demand for safe haven gold on Tuesday as volatility reigned in currency markets.
Gold was also supported by some soft February inflation data from the U.S., underlining the case for the Federal Reserve to maintain its current wait-and-see stance.
Speaking last Friday, Fed Chairman Jerome Powell justified the “wait-and-see approach” given that there was “nothing in the outlook demanding an immediate policy response and particularly given muted inflation pressures.”
Markets remain skeptical that the Fed could hike rates this year, particularly after the employment report showed weak job creation in February. Fed fund futures suggest a 10% possibility that the next move in rates will be down.
The pause in policy tightening benefits gold as it lowers the opportunity cost of holding non-yielding bullion.
In other metals trading, silver futures rose 0.97% at $15.4223 a troy ounce by 7:52 AM ET (11:52 GMT).
Palladium futures traded up 1.28% to $1,500.90 an ounce, while sister metal platinum gained 1.71% at $830.80.
In base metals, copper advanced 1.10% to $2.933 a pound.