Gold held steady on Wednesday, supported by uncertainty around Brexit, after lawmakers voted down British Prime Minister Theresa May's deal to leave the European Union, and hopes for a rate hike pause by the U.S. Federal Reserve. Spot gold was steady at $1,289.70 per ounce at 0442 GMT. U.S. gold futures were up 0.1 percent at $1,289.40 per ounce. "The safe haven appeal is quite strong as there are rising possibilities of a disorderly Brexit," said Benjamin Lu, analyst with Phillip Futures, adding the metal was holding pretty well despite competing influence from U.S. equity markets British lawmakers defeated May's Brexit divorce deal by a crushing margin, triggering political chaos that could lead to a messy exit from the EU or even to a reversal of the 2016 decision to leave. "We are seeing weakness in economy in China as well as the U.S. and markets are expecting that Fed might slow interest rates in the near future," Lu said. In separate appearances on Tuesday, Fed policymakers from across the spectrum of views agreed the central bank should pause further rate hikes until it is clear how much the U.S. economy will be held back by larger risks like slowing growth in China and narrower ones like the ongoing budget stalemate in Washington. Gold tends to gain on expectations of lower interest rates, as they reduce the opportunity cost of holding non-yielding bullion. Lower interest rates also tend to weigh on U.S. yields and the dollar, in which gold is priced. The U.S. economy is taking a larger-than-expected hit from a partial government shutdown, White House estimates showed on Tuesday, with the longest such shutdown in U.S. history dragged into its 26th day. "The scaling back of (Fed rate hike) expectations removes a key drag on prices that hindered much of the upside momentum in 2018," Standard Chartered said in a research note. "The macro backdrop is shaping up to be more supportive for gold. However, we would caution restraint for now, as inflationary risks have been contained, U.S. dollar weakness stalled in recent sessions and equity markets have stabilised." Spot gold has gained more than 11 percent since hitting a 1-1/2-year low in mid-August at $1,159.96, mostly due to tumultuous stock markets and a weakness in the U.S. dollar. Spot gold remains neutral in a range of $1,285-$1,299 per ounce, and an escape could suggest a direction, according to Reuters technical analyst Wang Tao. Among other precious metals, palladium rose 0.4 percent to $1,323 an ounce. It hit a record high at $1,342.43 last week. Platinum rose 0.3 percent to $795.50, while silver was steady at $15.57 an ounce. Source: Reuters
