Investing.com - Gold prices fell in North American trade on Tuesday, declining for the first time in three sessions as investor sentiment began to improve in wake of last week’s shock vote by the U.K. to leave the European Union.
The British pound, global stock markets and most risk-sensitive commodities were all higher on Tuesday as traders scooped up beaten down assets after Britain's vote to exit the EU stunned financial markets late last week.
Global equities suffered the largest two-day rout ever, as a wave of selling wiped around $3 trillion from markets.
Gold for August delivery on the Comex division of the New York Mercantile Exchange shed $8.70, or 0.66%, to trade at $1,316.00 a troy ounce by 12:45GMT, or 8:45AM ET.
Prices of the yellow metal surged to a 27-month peak of $1,362.60 last Friday, after a shock U.K. vote to exit the European Union sent investors flooding into bullion and other safe haven assets.
The news raised concerns that other countries might leave the union and that global growth would come under significant pressure, while the actual timeframe of the U.K. departure from the EU remained unclear.
In the latest blow for the U.K., ratings agency Standard & Poor's announced Monday that it had lowered the U.K.’s sovereign credit rating from "AAA" to "AA," citing last week's referendum. Meanwhile Fitch lowered its rating from AA+ to AA with a negative outlook.
European Union leaders will meet in Brussels later on Tuesday for the start of a two-day European Council summit to discuss Britain’s decision to leave the bloc.
Outgoing U.K. Prime Minister David Cameron is due to speak about the U.K.'s plans for exiting the now 28-member European Union.
Pressure was expected to be applied to the U.K. to trigger Article 50 which sets in motion the process of withdrawing from the EU.
Gold is up almost 25% so far this year, boosted by concerns over global growth and as market players all but ruled out further rate hikes by the Federal Reserve this year in the aftermath of Britain’s shock vote to leave the EU.
According to the CME Fed Watch tool, there’s currently a 0% probability of a Fed rate hike in July and a 7% probability of a rate cut. Odds for a September rate cut stood at 18%.
Market players payed little attention to data showing the U.S. economy grew by 1.1% in the first quarter, upwardly revised from a preliminary estimate of 0.8%.
Elsewhere on the Comex, silver futures for August delivery inched up 2.9 cents, or 0.16%, to trade at $17.80 a troy ounce during morning hours in New York, while copper futures jumped 5.3 cents, or 2.52%, to $2.179 a pound.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.6% at 95.97, off the previous session’s three-month highs of 96.86.