Deal or No Deal ?
Today in a vote of 391 to 242, the U.K. Parliament rejected Teresa May’s Brexit deal. This is the second time the British Parliament has rejected the Prime Minister’s proposed Brexit deal.
As reported by MarketWatch, “Market participants expected the rejection, as the House of Commons rejected her initial deal in January, and the last-minute assurances May received from the European Union weren't believed to be sufficient to turn votes around.”
This means that Parliament will vote upon a no-deal referendum pertaining to whether or not they will leave the European Union. Tomorrow they will have the opportunity to vote on a hard, no deal Brexit. This will be followed by a vote on a possible extension of the March 29th Brexit deadline on Thursday.
The net result of today’s vote was to put pressure on the British Sterling, as well as being highly supportive of the euro dollar. As of 3:50 PM Eastern standard time the British pound is currently trading off by just over half a percent and fixed at 1.3085. The euro dollar is currently trading up just under half percent and fixed at 1.13023.
As it relates to the dollar index, which is composed of a basket of currencies, the euro dollar has a heavy weight of 57.6 %, with the British pound weighted at 11.9 %. Currently the U.S. dollar index is off by 33 points (-0.35%), which in-turn is highly supportive of the precious metals which are traded and paired against the U.S. dollar.
Gold is trading higher both in the spot and futures markets. Spot gold is currently fixed at $1301. On closer inspection we can see that it was both dollar weakness as well as market participants bidding the precious yellow metal higher which contributed to today’s gains. According to the KGX (Kitco gold index), dollar weakness provided $3.20 in gains, with bullish market sentiment bidding gold higher by $4.90 resulting in today’s gains of $8.10.
Gold futures are trading higher on the day, with the most active April Comex contract currently fixed at $1301.80 which is a net gain of $10.70 on the day. Even with this impressive gain gold in terms of percentages had the smallest gains of the precious metals complex. It was platinum that gained the most on a percentage basis, and after factoring in gains today of 2.34% (+ $19.10) is currently fixed at $835.90.
Silver came in second gaining 1.15% today, which amounts to a net gain of $.18 and is currently fixed at $15.455. Palladium continues its impressive gains and although it only gained 1.07% on the day, it maintains its status as the most expensive precious metal of the group. Currently palladium futures are $2.20 away from once again trading to $1500 an ounce, and currently fixed at $1497.80.
So, in the words of the not so immortal Howie Mandell, British lawmakers will have the opportunity to answer and vote on a, “Deal or no deal ?”
Wishing you as always, good trading,