June 23 Gold edged up after touching a fresh two-week low early on Thursday on cautious optimism that
British voters would opt to stay in the European Union.
A vote to leave the 28-member bloc could tip Europe back into recession, putting more pressure on the global economy and increasing the appeal of bullion as a counter-cyclical asset.
Spot gold was up 0.3 percent at $1,269.60 an ounce by 0644 GMT. Bullion touched a low of $1,260.36 earlier in the
session, its worst since June 9.
"In the near term, gold appears heavily focused on the United Kingdom referendum vote and will likely move according to the results," HSBC analyst James Steel said in a note.
"Once the effects of the referendum results pass, we would expect that gold will eventually focus back on other price drivers and fundamentals. There is a good argument that in the near term gold may be overbought."
The poll verdict aside, the medium- to long-term view for the yellow metal, which has risen about 20 percent this year, is still bullish and $1,250 to $1,315 an ounce is likely to be the range in the immediate future, said Mark To, head of research at Hong Kong's Wing Fung Financial Group.
"I believe the major factor affecting gold (in the long term) is not a single risk event like Brexit," he added. William Wong, assistant head of dealing for Wing Fung's
precious metals desk, said gold prices could drop down to $1,230 an ounce if Britain chooses to continue being a part of the European Union.
Gold dropped for a fourth straight day as investors prepared for the outcome of Britain's referendum on membership of the European Union, with voting set to start at 7 am local time.
Bullion for immediate delivery lost as much as 0.4 per cent to US$1,260.69 an ounce, the lowest price since June 9, and traded at US$1,262.01 at 7:41 am Singapore. It fell 2.5 per cent in the opening three days of the week.
The metal, which rallied to the highest since 2014 last week, has dropped amid speculation voters will keep the country in the EU, diminishing demand for a haven.
While polls in the lead up to voting day have shown a tight race, bookmakers' odds favor a 'Remain' victory. Governments and central bankers have warned a vote for Brexit may spark turmoil.
A decision to leave may propel gold to US$1,400 an ounce, while the opposite result would hurt prices that have been supported this year by the US Federal Reserve standing pat on interest rates, according to Societe Generale SA. Either result would lift bullion's volatility, the bank said.
Reference: Reuters
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