Gold rose on Wednesday as the dollar retreated and investor appetite for safe assets remained strong because of longer-term financial uncertainty after Britain's surprise vote to leave the European Union.
Gold prices drifted lower in Asia on Thursday as investors booked recent gains and awaited fresh cues on Britain's efforts to navigate an exit from the European Union.
On the Comex division of the New York Mercantile Exchange, gold for August delivery traded eased 0.73% to $1,317.25 a troy ounce.
Overnight, gold rose considerably on Wednesday, amid a weaker dollar, as the long-term ramifications stemming from last week's historic Brexit referendum remained in focus.
Since Brexit polls closed last Thursday night in Britain, Gold has soared more than $60 an ounce or 4.5%. At session-highs last Friday, the precious metal eclipsed $1,360 to hit its highest level in 27 months. With one day left in June, Gold is up by more than 20% since the start of the year and is on pace for its strongest first half of a year in more than a decade.
In Brussels, European Council president Donald Tusk told reporters outside the EU Summit that it will not start the divorce process on any future negotiations with the U.K. until the country invokes Article 50 of the Lisbon Treaty. It came one day after U.K. prime minister David Cameron said he will leave the task to his successor when he steps down from the position by early-September. Once the U.K. summons Article 50, it will initiate formal negotiations with the European Union to leave the European bloc, a process which is expected to take a minimum of two years.
"Although there are still big uncertainties ahead, looking at the way equities have performed over the past couple of days, a risk-on mentality is definitely coming back," Mitsubishi Corp Jonathan Butler said.
"In the medium term, gold is going to be supported by the unlikelihood that the Fed will raise rates in the next couple of months."
Global stock markets continued to recover after last week's hefty losses, while the dollar was down 0.5 percent against a basket of leading currencies.
"If Brexit is seen severely impacting the market, central banks will step in to calm the markets, which would not be good for gold," said Jiang Shu, chief analyst at Shandong Gold Group.
Reference: Reuters, Investing
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