Investing.com - Chinese stimulus might just be the thing to frustrate gold bugs' yearning for new highs above $1,300 this year.
Fears over the Brexit deal vote outcome for Britain were expected to push gold futures higher on Tuesday from its previous settlement of 1,291.30 per troy ounce.
But the yellow metal fell as investors boosted equity prices instead in response to a plan by Beijing's National Development and Reform Commission to make the first quarter “a good start” to the year: coded language for an economic stimulus.
Gold futuresfor February delivery on the Comex division of the New York Mercantile Exchange settled down $2.90, or 0.2%, at $1,288.40 a troy ounce. The high for the day was $1,294.70. Gold cracked the $1,300 resistance on Jan. 4, reaching an intraday high of $1,300.40, before falling back.
The spot price of gold, meanwhile, traded down $1.80, or 0.1%, at $1,289.76 by 3:26 PM ET (20:26 GMT).
"The Brexit vote was initially on the minds of traders for today, but the China factor turned out to be bigger," said George Gero, precious metals analyst at RBC Wealth Management in New York.
Equities and other risky assets such as crude oil rallied on Tuesday at the expense of safe havens such as gold as analysts estimate there could be as much as 2 trillion yuan ($296.21 billion) worth of cuts in federal taxes and fees under the Chinese stimulus measures to be unveiled in coming months. Aside from that, local governments could issue another 2 trillion yuan in special bonds to fund key projects.
Britain's parliament, meanwhile, rejected Prime Minister Theresa May's divorce plan from the EU in a widely-expected move, forcing her to come up with a backup plan. If nothing is approved by March 29, Britain would make a “no-deal” departure from the bloc, which could pose dire economic risks.
In other Comex trading, palladium futures fell by 65 cents, or 0.1%, to $1,281.35.
Patinum futureswere down 30 cents at $802.20.
Silver futures fell 0.4% to $15.63.
In base metals, COMEX copper rose 0.3% to $2.64 per pound.