Gold Declines a Second Day, Copper Rises as Brexit Fears Ease

Gold Prices Are Still Solid
  • Copper, miners rally on higher investor appetite for risk
  • Hedge funds’ net-long positions in gold futures near record

Gold fell for a second session as polls showing British voters tilting toward remaining in the European Union reduced investor demand for a haven. Copper and other industrial metals advanced.

Bullion rallied to the highest in almost two years last week as global central bankers sounded the alarm that a British exit from the European Union could be disruptive to the global economy. Federal Reserve Chair Janet Yellen said concern over a so-called Brexit played a part in policy makers’ decision to hold off from raising rates last week. A turn in voter sentiment in the latest poll eased market concerns.

The pound jumped against the dollar by the most since 2008, spurring a global rally in higher-yielding currencies, as equities including base-metal miners advanced along with copper. A poll done for the Mail on Sunday after the killing of pro-EU British lawmaker Jo Cox showed 45 percent of voters backed the “Remain” camp, while 42 percent favored Brexit.

The survey “is helping calm the financial markets again somewhat, as a result of which gold is currently in less demand,” Commerzbank AG analysts including Daniel Briesemann, said in a note. Industrial metals “are profiting from the increased risk appetite among market participants and from the weaker U.S. dollar and are gaining across the board as the new week begins,” the analysts said.

Gold futures for August delivery slipped 0.2 percent to settle at $1,292.10 an ounce at 1:45 p.m. on the Comex in New York. Copper futures for July delivery rallied 2 percent to $2.093 an ounce on the Comex.

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A gauge of 18 global base-metal producers tracked by Bloomberg Intelligence rallied 3.6 percent, led by Anglo American Plc and Freeport-McMoRan Inc.

In the run-up to the vote, investors added to holdings in gold-backed exchange-traded funds. As of Friday, the assets in ETFs rose 0.4 percent to 1,895.1 metric tons, the highest since October 2013.

At the same time, hedge funds are holding the second-biggest bet ever that the metal will rally further. In the week ended June 14, money managers boosted their net-long positions in gold futures and options 29 percent to 240,862 contracts, according to U.S. Commodity Futures Trading Commission data.

In other metals:

  • Silver futures rose 0.6 percent to $17.514 an ounce on the Comex while platinum and palladium gained on the New York Mercantile Exchange.
  • On the London Metal Exchange, copper, aluminum, zinc, nickel, and lead rallied. Tin declined.
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