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Spot gold climbs 1 percent, investors seek safe-haven after 'Brexit' vote

The result of the British vote forced the resignation of Prime Minister David Cameron and dealt the biggest blow since World War Two to the European project of forging greater unity.

twitter-logo Reuters        Last Updated: June 27, 2016  | 13:03 IST
[Photo:Reuters]

Spot gold prices climbed more than 1 percent on Monday as aftershocks from Britain's vote to leave the European Union pushed investors towards the safe-haven asset.

The result of the British vote forced the resignation of Prime Minister David Cameron and dealt the biggest blow since World War Two to the European project of forging greater unity.

British Finance Minister George Osborne, who had warned during the campaign that a "Brexit" would cause financial market volatility, scheduled a statement for 7 a.m. (0600 GMT) on Monday to provide reassurance about "financial and economic stability".

Spot gold had risen 1.30 percent to $1,332.55 an ounce by 0055 GMT, after touching a high of $1,335.30 earlier in the day. Bullion prices surged by 4.8 percent in the previous session to top out at $1,358.20 - the highest since March 2014.

U.S. gold rose 1 percent on Monday to $1,336.90 an ounce.

"Over the medium term, the gold forecast is very positive and now we have another reason to remain long gold. In the next week or two, we think gold could push towards $1,400," said ANZ analyst Daniel Hynes.

"Once things settle down, there will be more clarity around the UK's exit from the EU, and other issues which are still quite supportive like the weak U.S. dollar and the U.S. Federal Reserve remaining dovish."

The referendum verdict likely means the U.S. Federal Reserve's ambitions for two rate rises this year have been placed on hold.

"I think the market is certainly assuming that given the volatility, there is little chance of a Fed rate hike in July which will only strengthen gold," Hynes added.

In wider markets, Asian stocks opened weaker and the British pound fell almost 2 percent in early Asian trade on Monday.

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