Gold ticks lower after Britain unveils Brexit deadline

Gold
Source: World Gold Council

Gold edged higher on Monday in response to Britain's decision to set a March deadline to start divorce proceedings from the European Union.

Spot gold was down 0.2 percent at $1,311.56 an ounce at 3:15 p.m. ET, with volumes muted due to a holiday in China.

Markets in China are closed from Oct. 1-9 for the Chinese National Day holidays.

U.S. gold futures is down 0.2 percent to $1,314.50.

British Prime Minister Theresa May's move on Sunday to set out the timing for when Britain would trigger the process for leaving the EU had little impact on gold demand.

The March deadline was unlikely to have an immediate effect on gold prices, with any impact being seen in the mid-to-long term due to safe-haven buying, Julius Baer analyst Carsten Menke said.

But a 0.9 percent rise in sterling gold prices after a drop in the pound to three-year lows versus the euro, and three-month lows against the dollar, prompted some British buyers of physical metal to cash in gains.

"We're seeing some selling back, because obviously sterling has collapsed a bit, which has pushed the gold price up in sterling terms, which has seen people taking a profit and selling rather than buying," one London-based gold dealer said.

Also weighing on gold were firmer stock markets, including Britain's FTSE 100, which rose more than 1 percent, partly helped by the drop in sterling, as a weaker pound typically benefits the FTSE's export-driven, internationally focused companies.

Reports that Deutsche Bank was negotiating a reduced settlement with the U.S. Department of Justice also boosted risk appetite among investors.

Analysts will look to U.S. non farm payrolls report on Friday to provide more clarity on whether the U.S. Federal Reserve is on track to raise interest rates by the end of this year.

Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar and making commodities more expensive for non-U.S.-firms.

Platinum was the only precious metal that was trading lower on Monday after South Africa's biggest platinum mine-workers' union signed a two-year wage agreement with Impala Platinum.

Silver rose 0.44 percent to $19.24 an ounce, platinum slipped 0.51 percent to $1,018.49, and palladium was up 0.35 percent at $722.