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Gold fell on Tuesday as investors booked profits, two days after the yellow metal rallied to its highest since March 2014 thanks to safe-haven demand in the wake of Britain's decision to exit the European Union.

"So far it has mainly been Chinese selling. They have been good sellers the whole way up, especially when we passed $1,300. We continue to see decent selling from them," said MKS Group trader Alex Thorndike.

"It seems like the market is pausing here a bit now considering the moves we have seen since Friday. But in a couple of weeks I think we could see prices in the $1,375-$1,400 range."

British bank Standard Chartered, however, said the gold rally has lost its momentum and it would be difficult for the metal to float above $1,300an ounce.

"Once the immediate short-run rush to safety subsides and assuming effective policy responses to allay capital market concerns, we think gold will struggle to stay above $1,300/oz during Q3, and will push back down towards USD 1,250/oz," the bank said in a note.

The metal has had very good support since the UK shocked the world last week, but many analysts think it has a lot more to give.

“We anticipate a sizable ‘safe-haven’ inspired trade in the metal… and gold prices to rally significantly to reach $1,400/oz,” HSBC’s chief precious-metals analyst James Steel told specialist metal’s newsite Kitco

“The link is the interconnection between gold and wider financial markets,” he said. “In periods of uncertainty, gold is often one of the few perceived ‘safe-haven’ assets with liquidity. It is also historically negatively correlated with risk-on assets

Prices are holding strong gains above $1,300 since last Friday’s referendum shock. Now Societe General’s head of metals research is now calling for the metal to move much higher.

“We expect prices to rise to $1,400/oz, with follow-through strength extending to the rest of the precious metal sector,’ Robin Bhar wrote on Monday.

Reference: Reuters