Gold gains as updated Brexit deal weakens dollar vs pound

Gold rose on Tuesday as the dollar weakened against the pound after the European Commission accepted amendments to the UK's Brexit deal, although gains were limited as the agreement also buoyed sentiment for riskier assets.

Spot gold was up 0.2 percent at $1,296.84 per ounce as of 0605 GMT, while U.S. gold futures rose 0.5 percent to $1,297.20 an ounce.

The dollar was down 0.1 percent against its major peers, making gold an attractive investment for non U.S. currency holders, while the sterling soared after the Brexit deal changes.

European Commission head Jean-Claude Juncker on Monday agreed an updated Brexit deal with British Prime Minister Theresa May to make the agreement more palatable to UK lawmakers.

"There was a bit of move out of the U.S. dollar which lifted gold slightly," said Kyle Rodda, a market analyst with IG Markets in Melbourne, adding there is also increased risk appetite in the market which is capping gold's gains.

The updated Brexit deal boosted Asian shares ahead of a vote in the British parliament on a divorce agreement.

"What would be very interesting to watch in the coming days is how the Brexit talks play out," said Rodda, adding that a lower chance of the UK crashing out of the EU with no deal will prop up the pound and push down the dollar, supporting bullion.

Gold also found some support from increasing concerns about global growth. U.S. retail sales rose modestly in January, but the recovery was not seen strong enough to alter the course of a U.S. economy that was losing momentum in early 2019.

"Market is now awaiting U.S. consumer prices index (CPI) data and any changes may affect the stance of Federal Reserve," said Vandana Bharti, assistant vice-president of commodity research at SMC Comtrade.

"There is no clear direction for gold and for a period of one week or two we can see it trading around $1,280 and $1,310 range."

Gold may retest a resistance at $1,301, a break above which could lead to a gain into the range of $1,307-$1,313, according to Reuters analyst Wang Tao.

Among other precious metals, palladium was down 0.1 percent at 1,534.79 per ounce.

Silver gained 0.5 percent to $15.39 per ounce, while Platinum was flat at $824.54 per ounce, after touching its lowest since Feb. 19 at $803.50 in the previous session.