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Gold rebounded on Wednesday from its losses in the previous session on investor demands for safety as uncertainty due to Brexit vote continued to pressure financial markets.

Gold advanced as the likelihood of an interest rate increase in the U.S. diminished following Britain’s vote to quit the European Union.

Gold is trading near its highest level in more than two years and is heading for a second quarterly gain as investors abandon risk assets and turn to havens amid concerns that Brexit could disrupt the world’s economic recovery. Federal Reserve Governor Jerome Powell said Tuesday that global risks have shifted further to the downside after the referendum, introducing new uncertainties that may merit reassessing monetary policy.

Traders are now pricing in a greater probability that the Federal Reserve will cut rates in upcoming meetings rather than raise them. They don’t assign more than a 50 percent chance of an increase until the beginning of 2018, Fed funds futures show. A gauge of the dollar held its decline.

"Despite Tuesday's impressive bounce in global equity markets (leading to gold's modest retracement), we are not sure whether these patterns will stay in place over the rest of the week and would not be surprised to see more weakness in equities going into Wednesday's session," said INTL FCStone analyst Edward Meir.

"As a result, gold could recover the ground it lost on Tuesday, with geo-political headlines outside Europe possibly providing an additional element of support."

Gold has soared after the U.K.’s vote last week as investors seek a haven from financial turmoil and contemplate the possible implications, including additional steps from central bank policy makers in Europe, the U.S. and Asia. Holdings in bullion-backed exchange-traded products have swelled to the highest level since September 2013 as banks including Goldman Sachs Group Inc. have boosted their price forecasts.

Gold’s investment case has been strengthened by the U.K.’s vote to quit the European Union as the fallout may spur the world’s central banks to step up easing, hurting currencies and favoring bullion, according to Marc Faber, publisher of the Gloom, Boom & Doom Report.

Gold may also be benefiting from some geopolitical risk after coordinated attacks on passengers at Istanbul’s international airport killed at least 36 people on Tuesday. Islamic State is likely responsible for the killings, Prime Minister Binali Yildirim said in televised remarks.

Holdings in gold-backed exchange-traded funds rose 5.6 metric tons to 1,940.3 tons as of Tuesday, the highest level since September 2013, data compiled by Bloomberg show. Investors have added 35.7 tons to ETFs in the past three days, the biggest such increase in four months.

Reference: Bloomberg, Reuters