Investing.com -- Gold remained near four-week highs on Tuesday, as mounting Brexit fears accelerated a global flight to safety that pushed German 10-Year Bunds into negative territory for the first time in history.
On the Comex division of the New York Mercantile Exchange, Gold for August delivery traded between $1,279.00 and $1,292.95 an ounce before settling at $1,285.30, down 1.60 or 0.12%. With the slight losses, gold halted a five day winning streak. Despite the mild sell-off, the precious metal has still surged approximately 20% in 2016, and is on pace for one of its strongest first halves of a year in more than a decade.
Gold likely gained support at $1,125.00, the low from February 3 and was met with resistance at $1,304.40, the high from May 2.
Investors continued to closely monitor poll results in the U.K., which increasingly show a British public shifting their support to the "Leave," campaign, ahead of next week's controversial Brexit referendum. An online poll from TNS said a Leave vote widened its lead over a vote to "Stay" by a 47-40 margin, as Rupert Murdoch's Sun newspaper backed a campaign to depart from the European Union. Another survey, a YouGov poll for The Times, found that the "Leave" vote held a 46-39% lead, while 11% remained undecided. It came days after a popular columnist from The Telegraph broke ranks with the British establishment and supported a vote to leave. Last week, the Remain campaign held a slight one point lead in the same YouGov poll.
Yields on German 10-year bunds tumbled to a record low at Minus-0.034 before rallying slightly to Minus-0.008, as risk-adverse traders continued to pile into safe-haven assets, pushing yields lower. As a result, financial stocks throughout the euro zone tumbled on Tuesday. Shares in both Deutsche Bank AG (DE:DBKGn) NA O.N. (NYSE:DB) and Credit Suisse (SIX:CSGN) Group AG (NYSE:CS) fell sharply, each touching down to fresh record-lows during the session. In Asia, yields on the Japan 5-Year fell to a record-low at Minus-0.28%.
Elsewhere, the Federal Reserve convened for its two-day June monetary policy meeting, which will conclude with a closely-watched interest rate decision on Wednesday afternoon. While the Federal Open Market Committee (FOMC) is not expected to raise short-term interest rates at the meeting, Fed chair Janet Yellen could provide clues on whether the U.S. central bank could lift rates before the end of the fall. The FOMC has left the target range of its benchmark Federal Funds Rate steady at a level between 0.25 and 0.50% at each of its first three meetings this year.
Investors who are bullish on Gold are in favor of a gradual tightening of monetary policy by the Fed. Gold, which is not attached to interest rates, struggles to compete with high-yield bearing assets in rising rate environments.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, surged more than 0.60% to an intraday high of 95.14. The index is still down by more than 5% since early-December.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for July delivery lost 0.078 or 0.45% to $17.365 an ounce.
Copper for July delivery fell 0.013 or 0.61% to $2.041 a pound.