Gold climbed to its highest in over two years early on Wednesday, its safe-haven appeal burnished in the face of tumultuous global markets as fallout mounted from Britain's decision to leave the European Union.
Gold prices rose for a fifth straight session and traded close to a two-year high above $1,350, as weak China data and ongoing uncertainty following Britain's vote to leave the European Union triggered a fresh wave of demand for the safe-haven metal.
Risk aversion swept though markets after the Bank of England's warning on the economic risks of "Brexit," as well as news of a decline in U.S. factory orders and reports of mixed manufacturing and service sector activity in Asia and Europe.
"Safe haven demand has continued to grow ... A lot of people believe that global monetary easing worldwide is going to continue," said Phillip Streible, senior commodities broker at R.J. O'Brien in Chicago. "I think the gold market is a good place to go right now, especially with record low interest rates."
"The market is extremely nervous," said Afshin Nabavi, head of trading at MKS. "That's why gold and silver are benefiting."
The strength in the dollar and some profit taking kept some pressure on prices. The U.S. dollar rose 0.4 percent against a currency basket.
"The UK recovery will probably falter due to heightened uncertainty about the country's future relations with the EU27, but a more competitive exchange rate along with additional policy support will cushion the blow," Capital Economics analysts wrote in a research note.
* Holdings in SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, rose 3.02 percent to 982.72tonnes on Tuesday, highest since June 2013.
Reference: Reuters, UBS
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