Gold futures struggled for direction Wednesday as investors waved off turmoil surrounding the U.K.’s plan to leave the European Union and continued to pile into equities, depriving the yellow metal of haven-related demand.
Gold saw little lasting reaction to a historic defeat for U.K. Prime Minister Theresa May’s government in a parliamentary vote Tuesday on her proposal for the terms of the country’s departure from the European Union, which is scheduled for March 29. The plan was defeated overwhelmingly by a margin of 432-202 in the House of Commons, with May’s government facing a vote of no confidence later Wednesday.
May is expected to survive the no-confidence challenge, but the path ahead in the Brexit process remains unclear.
“The gold price hardly responded at all to the Brexit vote, no doubt partly because sterling quickly recouped its losses after an initial negative reaction. As such, gold is trading almost unchanged at a good $1,290 per troy ounce this morning. The Brexit chaos continues, however, so gold should remain well supported,” wrote analysts at Commerzbank.
The U.S. dollar was little changed versus major rivals, with the ICE U.S. Dollar Index DXY, +0.06% a measure of the currency against a basket of six major rivals, up 0.1%. Gold and other commodities exhibit varying degrees of an inverse relationship with the dollar. A stronger dollar can weigh on demand by making commodities priced in the currencies more expensive to users of other currencies; a weaker dollar can have the opposite effect.
Meanwhile, U.S. stock-index futures pointed to a modestly higher open for Wall Street as investors focus on corporate earnings.
March copper HGH9, +0.97% rose 1.3% to $2.668 a pound.
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