PRECIOUS-Gold gains as investors seek refuge after Brexit vote

Published 2016-06-27, 06:33 a/m
PRECIOUS-Gold gains as investors seek refuge after Brexit vote
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* Gold rose the most since 2009 on Friday after Brexit
* Silver up after marking 1-1/2 year high on Friday

(Updates throughout, changes dateline from BENGALURU)
By Clara Denina
LONDON, June 27 (Reuters) - Gold rose on Monday, sticking
close to a more than two-year peak reached in the previous
session, as uncertainty over Britain's vote to leave the
European Union forced investors to sell equities and seek safer
assets.
Bullion surged 4.8 percent on Friday, its biggest single-day
gain since January 2009, as the British vote forced a selloff in
risky assets from industrial commodities to stocks and sterling.
Gold is often perceived as a hedge against economic and
financial risk.
Spot gold XAU= rose as much as 1.5 percent to a session
high of $1,335.30 an ounce and was up 0.8 percent at $1,325.46
by 0959 GMT. It rallied 8 percent to $1,358.20, the highest
since March 2014, at one stage on Friday.
Gold denominated in sterling XAUGBP=R rose to its highest
since April 2013 on Friday, as the currency fell to its lowest
in 31 years. MKTS/GLOB
"The uncertainty around the timing of negotiations to leave
the EU means that not only do investors become more defensive
and buy things like gold and the dollar, but it also keeps
sterling under pressure and translates into a permanent loss of
economic activity at domestic level," ETF Securities analyst
Martin Arnold said.
The British referendum verdict probably means the Fed's
ambitions for two rate rises this year have been placed on hold,
analysts and experts said.
Goldman Sachs (NYSE:GS) has raised its gold price forecasts saying
Brexit suggested a more sustainable impact on the trajectory of
U.S. interest rates.
Gold is sensitive to interest rates changes, with increases
mostly signalling a rise in the opportunity cost of holding the
non-interest yielding metal.
"Gold price will go higher in the third quarter as the full
ramifications of Brexit begin to be felt but expect it to fall
back in fourth quarter after the U.S. election and as the Fed
gets ready to hike again," Macquarie said.
Holdings in SPDR Gold Trust GLD (NYSE:GLD), the world's largest
gold-backed exchange-traded fund, jumped 2 percent to 934.31
tonnes on Friday, the highest since July 2013. HLDSPDRGT=XAU
China's gold imports via main conduit Hong Kong rose nearly
68 percent in May to the highest since December, data showed on
Monday.
Spot silver XAG= rose 0.2 percent to $17.70 an ounce,
after hitting its highest since January 2015 on Friday.
Platinum XPT= rose 0.8 percent to $989 an ounce and
palladium XPD= was down 0.6 percent at $546.

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