Gold reaches seven-month high as dollar struggles 

Gold climbed to a seven-month high on Tuesday and stocks were back on the up too, as investors dug in for three days of political and economic drama and a blizzard of big tech earnings, starting with Apple later.

The main European and Asian markets held up well ahead of potentially galvanising events including a key Brexit vote on Tuesday, Wednesday’s US Federal Reserve decision and Thursday’s conclusion of the latest Sino-US trade talks.

London’s FTSE rose 1.3 percent and Frankfurt and Paris both made ground, driven by utilities, healthcare, miners and other defensive stocks.

Wall Street futures were also higher after series of profit alerts, including from digger maker Caterpillar, and US charges against China’s telecom giant Huawei, sparked one of the S&P 500’s worst days of the year on Monday.

For Asia, the blow had been cushioned by promises of more Chinese stimulus but Beijing had also berated Washington for blocking tactics in its World Trade Organisation appeal against US tariffs.

Amid the turmoil, safe-haven gold broke through $1,310 an ounce to reach its highest since May last year.

“Investors are very cautious, with many uncertainties on US-China trade talks and Brexit. Huawei is at the centre of the dispute, creating a very noisy background for the trade talks,” said Margaret Yang, a market analyst at CMC Markets.

“All these are making it more difficult for investors to judge the market’s direction. Money is fleeing into assets such as gold, seeking safety.”

The Sino-US moves, as well as bets that the Fed will sound more cautious on Wednesday, saw the dollar set a new two-week low and heightened the safe-haven appeal of the Japanese yen and the Swiss franc.

It lifted the euro too, while sterling held steady at $1.3166 and 86.88 pence to the euro before crucial parliamentary votes later aimed at breaking a deadlock over the manner of Britain’s exit from the European Union on March 29.

There were plenty of pre-vote twists. Prime Minister Theresa May told her senior ministers that in order to win parliament’s support for her Brexit deal, the agreement she negotiated with Brussels would have to be reopened.

“The prime minister said that in order to win the support of the House of Commons legal changes to the backstop will be required, that would mean reopening the Withdrawal Agreement (with the EU),” May’s spokesman told reporters.

The main opposition Labour Party meanwhile said it was telling its lawmakers to vote for a plan that could give parliament the power to delay Brexit.

Source: eNCA

---