January 16, 2019 / 1:21 AM / 6 months ago

PRECIOUS-Gold prices rise as failed Brexit vote drags on dollar

BENGALURU, Jan 16 (Reuters) - Gold prices inched up on Wednesday on expectations of a pause in U.S. interest rate hikes and as the dollar weakened against the pound after lawmakers voted down British Prime Minister Theresa May's deal to leave the European Union.

FUNDAMENTALS

* Spot gold was up 0.1 percent at $1,290.56 per ounce at 0050 GMT.

* U.S. gold futures had risen 0.2 percent to $1,290.60 per ounce.

* The U.S. dollar index fell 0.1 percent.

* British lawmakers defeated May's Brexit divorce deal by a crushing margin, triggering political chaos that could lead to a disorderly exit from the EU or even to a reversal of the 2016 decision to leave.

* Multiplying risks to the U.S. recovery, including now a self-imposed government shutdown, have broadened calls among even hawkish Federal Reserve officials to be patient before raising interest rates again.

* In separate appearances on Tuesday, policymakers from across the spectrum of views agreed the central bank should pause further rate hikes until it is clear how much the U.S. economy will be held back by larger risks like slowing growth in China and narrower ones like the ongoing budget stalemate in Washington.

* Half the Fed's 12 regional banks voted in December against raising interest rates, even as the central bank's rate-setting committee was signalling it would increase borrowing costs, minutes from discussions showed on Tuesday.

* Gold tends to gain on expectations of lower interest rates, as they reduce the opportunity cost of holding non-yielding bullion. Lower interest rates also tend to weigh on U.S. yields and the dollar, in which gold is priced.

* Investors should limit their exposure to UK assets as financial markets remain vulnerable to political volatility amid deepening uncertainty over the country's exit from the EU, UBS Global Wealth Management said on Tuesday.

* Investor concerns about company leverage hit a 10-year high as they continued to position against the risk of a global trade war, Bank of America Merrill Lynch's January fund manager survey found.

* U.S. President Trump talked up chances of a China trade deal and Chinese officials hinted at more stimulus for their slowing economy.

* The U.S. economy is taking a larger-than-expected hit from a partial government shutdown, White House estimates showed on Tuesday, with the longest such shutdown in U.S. history dragged into its 26th day. (Reporting by Nallur Sethuraman in Bengaluru; Editing by Joseph Radford)

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