Gold steady as firmer dollar counters political uncertainties

BENGALURU: Gold was steady on Wednesday as support for the metal stemming from uncertainty over Brexit and a partial U.S. government shutdown was countered by a firmer U.S. dollar.

Spot gold was little changed at $1,288.77 per ounce at 1255 GMT. U.S. gold futures were also unchanged at $1,288.50 per ounce.

Gold struggled to breach the $1,300 level, even though physical demand for gold coins had picked up in Britain due to uncertainty about its future relations with the European Union.

"Stock markets have recovered and the pricing in of the U.S. Federal Reserve rate hike has almost ended. Political uncertainty remains and that does not seem enough to push gold past $1,300," Commerzbank analyst Carsten Fritsch said.

Stock markets have steadied after a volatile end to last year, helped by the resumption of China-U.S. trade talks. The dollar index against a basket of six major currencies edged up.

British opposition Labour Party leader Jeremy Corbyn called a vote of no confidence in the government, to be held at 1900 GMT, after Prime Minister Theresa May's Brexit deal was defeated by lawmakers on Tuesday.

Britain is due to leave the EU on March 29, but investors now anticipate an extension of that deadline.

The increased likelihood of Britain's departure without securing a deal on its ties with the EU and the continuing partial U.S. government shutdown have helped keep gold supported near a more than six-month high of $1,298.42, hit on Jan. 4.

Expectations that the U.S. Fed will slow its interest rate hikes have also kept helped maintain gold's appeal.

Natixis analyst Bernard Dahdah said the dollar was still the main factor behind the movement in the gold price. A stronger dollar makes gold more expensive for holders of other currencies, which tends to put pressure on the metal.

"The impact of Brexit hasn't been as large on the price of gold as people thought it would be. It's the dollar that's still the main driver behind the prices of gold," he said.

Spot gold has been stuck between $1,285 and $1,299 per ounce, and breaking out from the range would suggest a direction, Reuters technical analyst Wang Tao said.

Among other precious metals, palladium rose 0.8 percent to $1,328.00 an ounce.

Platinum gained 0.4 percent to $797, while silver  shed 0.5 percent to $15.51, having earlier dipped to $15.46, matching a low last seen on Jan. 8.