MTS Help Center

Gold climbed on Monday, trading near a more than two-year peak reached in the previous session, as investors sought refuge in the safe-haven amid economic and political uncertainty after Britain voted to exit the European Union.

Bullion surged 4.8 percent on Friday, its biggest single-day gain since January 2009, as the British exit, or Brexit, forced a selloff in risky assets from industrial commodities to stocks and sterling. The pound and Asian stocks continued to reel on Monday. [MKTS/GLOB]

Finance minister George Osborne said Britain's vote to leave the bloc was likely to lead to further volatility on financial markets but said the economy was about as strong as it could be to cope with the challenge ahead.

Spot gold rose as much as 1.5 percent to $1,335.30 an ounce and was trading at $1,326.61 by 0645 GMT, up 0.9 percent. The metal rallied as much as 8 percent on Friday to peak at $1,358.20, the highest since March 2014.

U.S. gold for August delivery was up 0.7 percent at $1,331.10 an ounce.

"In the next week or two, we think gold could push towards $1,400," said ANZ commodity strategist Daniel Hynes, adding that a weak U.S. dollar and a dovish Federal Reserve would also support bullion.

The referendum verdict likely means the Fed's ambitions for two rate rises this year have been placed on hold, analysts and experts say.

HSBC said it believes "gold may reach $1,400 an ounce on a 'safe-haven' bid generated by the UK vote". "It is even possible that gold may trade higher longer term if the UK vote creates wider EU concerns."

Goldman Sachs too has raised its gold price forecasts saying Brexit suggested a more sustainable impact on the trajectory of U.S. interest rates.

According to Macquarie Research: "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." It increased its third-quarter forecast to $1,350.

The UK’s historic vote to end its European Union membership was a call to action for risk averse investors, triggering a $4.3 billion surge in holdings in gold-backed funds, the most in a single day in four years.

Prices could reach as high as $1,424 an ounce by the end of the year, according to the median of 12 forecasts in a Bloomberg survey of analysts and traders from New York to London conducted on Friday. That would be the highest since August 2013 and a gain of more than 7 percent from where the metal is trading now. Estimates in the survey ranged from $1,375 to $1,600.

Gold prices have rallied 25% this year as the Federal Reserve holds off on increasing US borrowing costs and negative interest rates are embraced in Europe and Japan. The Brexit referendum adds to uncertainty in global markets with hedge funds boosting their bets on price gains to an all-time high just two days before the vote.

The UK’s historic vote to end its European Union membership was a call to action for risk averse investors, triggering a $4.3 billion surge in holdings in gold-backed funds, the most in a single day in four years.

It adds up to a net inflow of $32 billion into bullion-backed exchange traded funds this year, pushing the assets to the highest level since October 2013, according to data compiled by Bloomberg. BlackRock, Bank of America Corporation and Eric Mindich’s Eton Park Capital Management are among the top holders in the SPDR Gold Trust, the biggest exchange-traded product backed by bullion.

Investors added 18.41 metric tons Friday to the SPDR Gold Trust, lifting the total volume to the highest since July 18, 2013. The trust’s total of 934.31 tons has a value of $39.5 billion, according to its website. BlackRock Inc. was the biggest investor in SPDR, holding 11% of assets, according to data compiled by Bloomberg based on February filings. Bank of America Corp. was the second-largest with 1.6% and Eton Park held 1.1%, based on March filings.

Money managers also boosted their net-long position in gold futures and options by 6.7% to 256 898 contracts in the week ended June 21, according to US Commodity Futures Trading Commission data released three days later. That’s the highest since the data begins in 2006. The previous record was 253 653 reached in August 2011 — just a month before gold touched $1 921.17 an ounce, the highest ever.

Reference: Bloomberg, Reuters