Investing.com – Gold prices fell on Friday, despite renewed political uncertainty in the UK, after the general election resulted in a hung parliament, as UK Prime Minister Theresa May’s Conservative party failed to secure a majority in parliament.
Gold futures for August delivery on the Comex division of the New York Mercantile Exchange fell $8.23 or 0.64%, to $1,271.27 a troy ounce.
Gold failed to capitalize on renewed geopolitical uncertainty, as the UK general election resulted in a hung parliament, sparking uncertainty as to whether Brexit talks would be delayed.
With the start of Brexit talks less than two weeks away, investors fear that Theresa May’s faces a difficult start to Brexit negotiations in the wake of the general election result, as her Conservative party lost the majority in parliament it held prior to the election.
Theresa May said on Friday Brexit talks would begin on 19 June as planned, but officials in Brussels remained doubtful.
Donald Tusk, the European council president tweeted “We don’t know when Brexit talks start”.
The UK general election result caught investors off guard, as many had expected Theresa May to increase her majority in parliament, strengthening her position ahead of crucial Brexit talks.
The dollar surged higher, as sterling fell to a nearly two-month low, decreasing demand for the precious metal, which remains on track to post is first weekly loss in five weeks.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.28% to 97.23.
Gold is expected to come under pressure, ahead of the Federal Open Market Committee (FOMC) next week. The Federal Reserve is widely expected to hike its benchmark rate at its June 13-14 meeting.
Gold is sensitive to moves higher in both bond yields and the U.S. dollar – A stronger dollar makes gold more expensive for holders of foreign currency while a rise in U.S. rates, lift the opportunity cost of holding non-yielding assets such as bullion.
In other precious metals, silver futures fell by 1.33% to $17.183 a troy ounce while platinum futures gained 0.33% to trade at $941.20.
Copper added 1.44% to $2.647, while natural gas rose 0.30% to 3.040.