Gold prices inched up on Wednesday as the U.S. dollar retreated from a 16-month high touched earlier in the week, easing amid a surge in the euro and sterling on a draft Brexit agreement.
Spot gold rose 0.2 percent to $1,203.88 per ounce at 0351 GMT. Prices had slipped to their lowest level since Oct. 11 at $1,195.90 in the previous session.
U.S. gold futures were up 0.2 percent at $1,203.2 per ounce.
“There has been some stalling in the U.S. dollar, the rise has eased helping gold to pick up,” said John Sharma, an economist with National Australia Bank (NAB).
A weaker greenback makes dollar-denominated gold cheaper for holders of other currencies.
“We are seeing investors and speculators snapping up gold because gold has the potential to go up to $1,230 to $1,240,” Sharma added.
The dollar index, which measures the greenback against a basket of six major currencies, was down about 0.2 percent, pulling back from a 16-month high.
However, the selloff in the dollar has been due to the improved risk sentiment around a potential Brexit deal and not because of any deterioration in the fundamentals of the U.S. economy, analysts said.
The British cabinet will meet at 1400 GMT on Wednesday to consider the withdrawal agreement after Britain struck a draft divorce deal with the European Union.
The uncertainties in Europe around Italy’s budget and Brexit, nervous movement in the stock market and the U.S.-China trade tensions are keeping gold firm, said Yuichi Ikemizu, Tokyo branch manager, ICBC Standard Bank.
“I expect gold to go up rather than down from here because investors are still not sure about the outcome of these events,” Ikemizu added.
Global shares on Wednesday sagged on concerns about global growth. MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.4 percent.
Spot gold may bounce to $1,211 per ounce, as it has found a support around $1,195, said Reuters technical analyst Wang Tao.
Meanwhile, holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.11 percent to 761.16 tonnes on Tuesday.
Among other precious metals silver was up 0.1 percent to $13.99 per ounce, having touched an over two-month low of $13.91 in the previous session.
Palladium rose 0.1 percent to $1,111.10 per ounce, while platinum fell 0.1 percent to $834.24 an ounce.