Gold eased on Tuesday as the dollar benefited from weak German economic data that pressured the euro, but the metal held near recent six-month highs as investors awaited a parliamentary vote on Britain’s plan to exit the European Union.
Spot gold was down 0.1 percent at $1,290.68 per ounce at 1211 GMT, while U.S. gold futures fell 0.1 percent to $1,290.60.
ActivTrades chief analyst Carlo Alberto De Casa said the dollar’s strength was pressuring gold. “Gold is still in a lateral range … unable to move above $1,300 or fall below $1,276,” he said.
The dollar was bolstered by weakness in the euro, which fell to a five-day low as Europe’s largest economy struggled with weaker global demand and trade disputes.
Also hurting the metal was a recovery in equities, which strengthened after Beijing signalled more supportive measures to stabilise a slowing economy, and emphasised that China is seeking a strong start to the year.
However, the outlook for global growth has been clouded by weak economic data dampening risk sentiment and helping the case for gold over the past few weeks. The metal hit its highest since mid-June on Jan. 4 at $1,298.42 an ounce.
“Gold is holding quite nicely near the $1,290 level, which is quite a healthy position,” said Philip Newman, director at Metals Focus.
“The fact that prices have held broadly at these levels for quite some time could encourage the physical markets to come back in.”
With the Lunar New Year drawing closer, physical gold is likely to see a boost in demand due to festive buying.
Investors are now focusing on Britain’s parliamentary vote on Prime Minister Theresa May’s Brexit policy.
Despite gold having already priced in a widely expected defeat for the British Prime Minister, uncertainty lies in what will happen after the vote, Newman said, which “could generate some interest in gold” in Europe.
Elsewhere, palladium rose 0.4 percent to $1,328.50 an ounce. The metal continues to trade at a premium to gold, hovering below an all-time peak of $1,342.43 hit last week.
“We see a sizeable physical deficit in palladium. Fundamentally, demand is also strong,” Newman said, adding that prices could continue to strengthen through 2019.
Among other metals, platinum shed 0.4 percent to $796.50 per ounce, while silver fell 0.5 percent to $15.57.