Gold edged higher on Monday as political uncertainty after Britain's vote to leave the European Union supported prices that had been propelled towards last week's two-year high by an overnight burst of short-covering activity in China.
The precious metal touched a peak of $1,357.60 an ounce overnight, less than $1 below last month's high.
Buying support for precious metals was also boosted by a strong gains for silver prices during the day. The dollar was little changed outside the commodities sector and provided no discouragement to gold bulls.
Spot silver, the price paid for immediate delivery, spiked nearly 7% to reach a daily high of $21.13 a troy ounce, the highest level since July 2014. The September futures contract rose 83 cents or 4.3% to $20.42 a troy ounce, also the highest value since July 2014.
The Brexit vote caused uncertainty and most people don't like that," Commerzbank analyst Carsten Fritsch told the Reuters Global Gold Forum on Monday. "Uncertainty leads to volatility in financial markets and to a rush into safe havens such as bonds and gold."
A post-Brexit recovery across European markets stalled on Monday, with major share indexes mixed. Analysts warned, however, that caution is likely to persist through the week with the Bank of England's quarterly financial stability report scheduled to be released on Tuesday, the June U.S. Federal Reserve meeting minutes due on Wednesday and U.S. jobs data on Friday.
The Shanghai Exchange Futures went limit up overnight, with onshore players having covered short positions aggressively in the past few days, especially on Monday, one analyst with an international investment bank said.
"There is a little bit of a two-way battle going on in silver with a number of players going short in China," the analyst said.
Reference: Reuters, Economic Calendar
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