Gold gains 1% on Brexit and growth risks

GOLD - BENGALURU. Gold jumped about 1% to a three-week high on Friday as concerns around Brexit and growing fears of a global economic slowdown drove investors towards bullion, while palladium notched an all-time high driven by short supplies of the auto-catalyst metal.

Spot gold was up 0.6% at $1,511.55 per ounce at 1051 GMT, having earlier hit its highest since Oct. 3 at $1,517.70. The precious metal has gained about 1.5% this week.

U.S. gold futures rose 0.7% to $1,514.40.

"A new round of weak economic data out of the United states has reinforced traders' concerns over the health of the economy and boosted expectations that the Federal Reserve is going to cut rates at its next meeting," said Phillip Streible, senior commodities strategist at RJO Futures.

"And with the UK elections next month, that's going to provide some anxiety and European investors are selling the British pound, euro currency and using that money to buy gold."

The European Union agreed to London's request for a Brexit deadline extension on Friday but set no new departure date, giving Britain's divided parliament time to decide on Prime Minister Boris Johnson's call for a snap election.

Meanwhile, data on Thursday showed new orders for key U.S.-made capital goods and shipments declined in September, a sign that business investment remains soft amid the trade war, building the case for another U.S. rate cut next week.

Gold tends to appreciate on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion.

With investment growth now falling due to rising uncertainty, a precautionary savings glut is developing, supporting gold and bond prices, analysts at Goldman Sachs said in a note.

"When combined with 750 tonnes of central bank gold purchases related to de-dollarization and defensive portfolio rotations, the savings glut means we maintain our bullish gold stance with a 6-month target of $1600/toz," the Wall Street bank said.

Elsewhere, palladium eased 0.5% to $1,768.76 an ounce, having earlier hit an all-time high of $1,785.50.

Concerns about a supply crunch for the metal used in autocatalysts have helped lift palladium prices by about 40% this year, despite a weakening auto sector.

Palladium is in a strong uptrend supported by the fundamental story, Saxo Bank commodity strategist Ole Hansen said. "If we do break $1,785, we could see some additional buyers into that break, taking palladium to the 1,800 level."

Silver jumped 2.7% to $18.24 per ounce after hitting its highest since Sept. 25 at $18.33. It was up about 4% for the week.

Platinum gained 1.3% to $936.15, on track for its best week in eight.