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Gold up on Brexit fears

Xinhua, June 15, 2016 Adjust font size:

Gold futures on the COMEX division of the New York Mercantile Exchange rose on Tuesday as investors weighed the potential for the United Kingdom to exit the European Union.

The most active gold contract for August delivery rose 1.20 U.S. dollars, or 0.09 percent, to settle at 1,288.10 dollars per ounce.

Investors displayed fear about the potential for the United Kingdom to vote on a referendum to leave the European Union. The referendum has been dubbed the "Brexit" by investors. Analysts note that the potential for a Brexit has caused volatility in the market, driving investors to gold as a safe haven. Analysts believe that this fear gave extensive support to the precious metal on Tuesday.

Investors are also preparing for the Federal Open Market Committee (FOMC) meeting announcement scheduled for after the market's close on Wednesday. This weighed on U.S. equities as the Dow Jones Industrial Average fell by 57 points, or 0.33 percent as of 19:00 GMT. Analysts noted that when equities post losses, the precious metal usually goes up, as investors are looking for a safe haven, while the opposite is true when U.S. equities post gains.

Strength in the U.S. dollar prevented the precious metal from rising further as the U.S. Dollar Index rose against most major currencies on Tuesday. The index is a measure of the dollar against a basket of major currencies. Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors.

On the economic front, the Commerce Department announced on Tuesday that advance estimates of the U.S. retail and food sales in May increased 0.5 percent from the previous month to 455.6 billion U.S. dollars, beating market consensus of a 0.3-percent gain.

Silver for July delivery fell 1.90 cents, or 0.11 percent, to close at 17.424 dollars per ounce. Platinum for July delivery dropped 23.40 dollars, or 2.35 percent, to close at 971.90 dollars per ounce. Endit