Gold at highest in over 2 yrs on renewed Brexit concerns
Spot gold touched its highest since March 2014 at $1,371.40, and was trading up 0.9% at $1,367.20 an ounce by 0401 GMT.business Updated: Jul 06, 2016 11:50 IST
Gold rose as much as 1% on Wednesday, hitting the highest in more than two years, as investors piled back into safe havens such as bullion amid renewed market jitters over Britain’s decision to leave the European Union.
Asian shares tumbled as fears over instability in the EU returned with a vengeance, sending the pound to three-decade lows and hammering risky assets.
Spot gold touched its highest since March 2014 at $1,371.40, and was trading up 0.9% at $1,367.20 an ounce by 0401 GMT. It surpassed the $1,358.20 mark hit on June 24 in the immediate aftermath of the Brexit vote.
US gold was up 0.8% at $1,369.40.
“No one is able to understand how much risk is yet to be unravelled [from Brexit]. That is an uncertainty that no one likes. This is what is driving gold prices higher,” said Helen Lau, an analyst at Argonaut Securities in Hong Kong.
The Bank of England took steps on Tuesday to ensure British banks keep lending as the financial consequences of the decision to leave the EU began to materialise.
The yellow metal, often favoured as a hedge against economic and financial uncertainty, has risen about 29% this year and is on track to log its biggest yearly gain since 2010.
Further boosting gold were comments from New York Federal Reserve president William Dudley, who said the central bank can be patient on raising interest rates due to low inflation and uncertainties over US economic prospects.
New orders for US factory goods fell in May on weak demand for transportation and defence capital goods, but growing order backlogs and lean inventories suggested the worst of the manufacturing downturn was probably over.
Investors will be watching out for signs on the US Federal Reserve’s thinking on rates from minutes of its June 14-15 meeting due later in the day.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, increased 3.02% to 982.72 tonnes on Tuesday, the highest since June 2013.
SPDR gold holdings have jumped more than 50% this year so far, heading for biggest annual rise since 2006.
Spot silver’s rally hit a bump on Tuesday as the metal fell 2%, its biggest one-day loss in about three weeks. It was up 1.7% at $20.26.
Among other precious metals, platinum, which was trading at two-month highs, edged 0.2% lower to $1,070.24 an ounce.
Palladium was up 0.3% at $599.47.