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Gold wallows near 2-week lows as markets brace for Brexit vote

Published 06/23/2016, 02:51 AM
Updated 06/23/2016, 02:51 AM
Gold holds near 2-week lows ahead of Brexit vote

Gold holds near 2-week lows ahead of Brexit vote

Investing.com - Gold futures struggled for direction near two-week lows in European trade on Thursday, as U.K. voters go to the polls for a referendum on European Union membership.

The vote on a potential Brexit was set to take place between 6:00GMT, or 7:00AM London time, and 21:00GMT, or 10:00PM in London, with results expected early Friday morning.

Recent polls showed that the race between the Leave and Remain campaigns was too close to call.

Gold for August delivery on the Comex division of the New York Mercantile Exchange fell to an intraday low of $1,261.50 a troy ounce, the weakest since June 9. It last stood at $1,271.25 by 06:55GMT, or 2:55AM ET, up $1.25, or 0.1%.

A day earlier, gold shed $2.50, or 0.2%, on growing expectations that Britain would vote to remain in the European Union.

Gold soared to $1,318.90 late last week, the most since August 2014, as worries about a potential exit by the U.K. from the European Union left investors scrambling for safe haven assets.

Meanwhile, as markets await the results of the U.K. referendum, traders will also watch for a number of U.S. data points due Thursday morning.

Weekly jobless claims are expected to fall to 270,000 from the prior week's 277,000, according to market analysts. New home sales are seen declining by 8.7% in May to a seasonally adjusted annual rate of 560,000, following a sharp jump the prior month to the highest level in more than eight years. Markit's preliminary U.S. manufacturing PMI is also scheduled for Thursday morning.

Comments this week by Federal Reserve Janet Yellen were seen to have played down the chances of a U.S. rate hike in July.

In her testimony before Congress, Yellen reiterated that she expected rate hikes to gradually increase this year, but warned that there was considerable uncertainty over the economic outlook. Yellen added that a U.K. vote to leave the EU could have significant economic repercussions.

According to CME Group's (NASDAQ:CME) FedWatch tool, market players are pricing in a 9.5% chance for a rate hike in July and 26% for September. Odds for a December rate increase stood at 53%.

Elsewhere on the Comex, silver futures for July delivery inched up 2.8 cents, or 0.16%, to trade at $17.34 a troy ounce during morning hours in London, while copper futures eased up 0.2 cents, or 0.12%, to $2.138 a pound.

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