By Barani Krishnan
Investing.com - The high drama over Britain's EU divorce has given gold bugs fresh $1,300 joy.
Despite winning a last-minute, legally binding concession from the European Union on Monday evening, U.K. Prime Minister Theresa May still lost a parliamentary vote on her Brexit plan later on Tuesday.
Gold futures for April delivery were up $10.85, or 0.8%, at $1,301.95 per ounce on the Comex division of the New York Mercantile Exchange by 3:00 PM ET (19:00 GMT). It moved up to a near two-week peak of $1,302.40 after the contract settled at $1,298.10, up $7.
Spot gold, reflective of trades in physical bullion, rose by $8.23, or 0.6%, to $1,301.68 by 3:00 PM ET after a session high at $1,302.09.
Gold saw stronger bids through Tuesday on Brexit developments. The shiny metal got a boost first on the back of weakness in the dollar as currency traders dumped the greenback against the sterling on initial signs that Britain's exit plan had a chance of succeeding. As the news flow changed direction -- and ended with the "no" vote -- gold continued to see support on safe-haven bets against the U.K. currency.
Analysts said gold's play in the near term, and chances of sticking at $1,300 levels, will depend on the outcome of May's Brexit plan and how that affects the British pound.
May said before the vote she would hold a vote on Wednesday on whether to leave without a deal and, if Parliament rejects that, then a vote on whether to ask for a limited delay to Brexit.
"Depending on what happens next, we could see the mid $1.20s again for sterling over the coming weeks," said Fawad Razaqzada, a London-based analyst with forex.com. "However, a surprise victory for May could trigger a big short squeeze rally with $1.35 being a potential short-term objective."
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 suggested 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.
Palladium prices rose, reaffirming its standing as the world's costliest metal.
The spot price of palladium rose by $1.90, or 0.1%, to 1,535.35 per ounce by 3:00 PM.
Trades in other Comex metals as of 3:00 PM ET (19:00 GMT):
Palladium futuresup $14.20, or 1%, at $1,496.20 per ounce.
Platinum futures up $18.40, or 2.3%, at $835.20 per ounce.
Silver futures up 19 cents, or 1.2%, at $15.46 per ounce.
Copper futures up 3 cents, or 1.1%, to $2.93 per pound.