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Gold Above $1,300 As May Suffers Another Heavy Brexit Defeat In Parliament

Anna Golubova

Kitco News

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Gold Above $1,300 As May Suffers Another Heavy Brexit Defeat In Parliament

(Kitco News) - Gold moved up as U.K. Prime Minister Theresa May suffered second Brexit defeat in just three months, raising market concerns over the quickly approaching March 29 Brexit deadline.

UK parliament voted on Tuesday to reject Prime Minister Theresa May’s Brexit deal by 391 votes to 242 after May said she secured "legally binding" changes to her Brexit deal.

Gold climbed above its key psychological level of $1,300, with April futures last trading at $1,301.40, up 0.80% on the day.

Kitco’s senior technical analyst Jim Wyckoff pointed to lower U.S. dollar as one of the reasons for higher gold prices on Tuesday. “A lower U.S. dollar index on this day and a mild U.S. inflation report are also friendly for the precious metals markets. Gold and silver bulls have regained some technical strength this week,” Wyckoff said in his PM Roundup.

The defeat was heavy for May, who warned Parliament that: “If this vote is not passed tonight, if this deal is not passed, then Brexit could be lost.”

Also, the European Commission President Jean-Claude Juncker said on Monday after talks with May that there will be "no third chance” for the U.K. if the deal is voted down again.

“There will be no further interpretations of the interpretations, no further assurances of the reassurances if the ‘meaningful vote’ tomorrow fails,” Juncker said.

The path forward is unclear, with the U.K. lawmakers scheduled to vote on Thursday on whether Britain should move forward with the exit from the EU without a deal. However, that vote is also expected to be rejected by the Parliament, according to local media reports.

This leaves the U.K. with a few other options on the table, including delaying the March 29 Brexit deadline, calling a snap election, or holding another referendum.

Despite May’s last-ditch effort to secure a better deal during a meeting with Juncker in Strasbourg on Monday, critics of May’s proposal were still unhappy with the results.

Labour leader Jeremy Corbyn said the updated deal negotiated by May had “failed” and did not contain “anything approaching the changes” that were promised by the Prime Minister.

Also, U.K.’s attorney general Geoffrey Cox, stated that the deal did not resolve the Irish border Brexit backstop issue, not allowing Britain to legally exit the so-called backstop arrangement in case of “intractable differences.”

“The legal risk remains unchanged that if through no such demonstrable failure of either party, but simply because of intractable differences, that situation does arise, the United Kingdom would have ... no internationally lawful means of exiting the protocol's arrangements, save by agreement,” said Cox on Tuesday.

Back in January, May’s deal was voted down by 230 votes, with 432 lawmakers voting against and 202 in favor of the deal. This marked the biggest legislative defeat in the U.K. House of Common’s history.

By Anna Golubova

For Kitco News

Contact agolubova@kitco.com
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