Gold holds near five-week high as Brexit concerns spur demand

SINGAPORE, June 15 — Gold held near its highest level in more than five weeks as risk aversion weighed on financial markets ahead of Britain’s vote on whether to leave the European Union, sending investors to haven assets.

The sterling price of bullion traded near the highest close since 2013.

Bullion for immediate delivery was little changed at US$1,286.30 (RM5265.53) an ounce by 2.32pm in Singapore, according to Bloomberg generic pricing.

The metal touched US$1,289.97 yesterday, the highest intraday level since May 6, capping five straight days of gains. Prices have climbed 21 per cent this year. 

Gold is benefiting from mounting investor concern before Britain’s June 23 referendum, which has sparked a slump in global stocks. 

The metal may hit US$1,350 in the days and weeks following an exit vote, Georgette Boele, an analyst at ABN Amro Group NV, said in a report. Central bankers in the US and Japan are meeting on monetary policy this week.

Futures traders ruled out any chance of a rate hike when the Federal Reserve ends its meeting today, with odds of a December increase at less than 50 per cent.

Poll angst

“Gold has been stepping up on a combination of lower Fed hike odds and increased haven demand,” Bernard Aw, a strategist at IG Asia Pte, said by e-mail.

“Investors are becoming more fearful of Brexit risk as recent polls showed the ‘Leave’ camp is commanding a lead, and the increased uncertainty is driving them to allocate more to safe haven assets, including gold.”

Five polls put the ‘Leave’ campaign ahead, and the Sun, Britain’s best-selling newspaper, backed a Brexit on its front page.

Gold priced in sterling fell 0.4 per cent to £907.63 (RM5271.13) after touching £912.99 yesterday, the highest since August 2013.

In China, bullion of 99.99 per cent purity climbed 0.6 per cent to 273.09 yuan (RM169.68) a gram on the Shanghai Gold Exchange.

Holdings in gold-backed exchange-traded funds added 3.6 metric tons to 1,880.3 tons as of yesterday, the highest since October 2013, data compiled by Bloomberg show.

They’ve risen for an 11th straight day.

Assets in silver ETFs have increased for 12 straight days and are just short of the record 20,182 tons set in October 2014.

Spot silver is up 26 per cent this year. Palladium rose 1.2 per cent and platinum added 0.6 per cent. — Bloomberg

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