Gold eased more than 1 per cent on Monday, extending its slide from a near 2-year peak hit last week, as polls ahead of a referendum showed Britain could opt to remain in the European Union.
Three opinion polls ahead of the June 23 vote showed the ‘Remain’ camp recovering some momentum, although the overall picture remains one of an evenly split electorate.
Easing concerns over ‘Brexit’ sparked a rally in Asian stocks and the sterling, and increased investor appetite for risk assets, hurting gold.
- In Kolkata, former British premier David Cameron says ‘soft Brexit’ likely
- Two years on, Brexit vote has taken a toll on UK economy
- UK Prime Minister Theresa May avoids London wipeout in local elections
- Latin American stocks, currencies jump for second day on reduced Brexit concerns
- Brexit: Futures rise as ‘In’ regains momentum in British EU vote
- Donald Trump says Britain should leave EU
A vote by Britain to leave the 28-member EU, dubbed “Brexit,” could tip Europe back into recession, putting more pressure on the global economy and thus boosting the safe haven appeal of bullion.
Spot gold dropped 1.1 per cent to $1,283.96 an ounce at 0701 GMT, after touching a low of $1,280.15 earlier in the session.
Bullion closed 1.5 per cent higher on Friday to post its biggest single day gain since June 3. The precious metal hit its highest since Aug. 2014 in intraday trade on Thursday. US gold slid 0.6 percent to $1,287.30
“We have to suspect that markets will remain quite choppy in the lead up to the British vote and in gold’s case, the path of least resistance will likely be higher,” INTL FCStone analyst Edward Meir said in a note.
“There could be a “post-vote” let down on Friday and heading into the following week, especially if investors realise that a ‘Leave’ vote is not going to have the Armageddon-like ending many are fearing.”
There was however some optimism for bullion as holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.59 percent to 907.88 tonnes on Friday, the highest since September 2013.
Hedge funds and money managers took their bullish stance in gold to the highest in nearly five years in the week to June 14, U.S. government data showed on Friday.
“The best case scenario for gold in the coming few days is that it stabilises at the current level just ahead of the $1,300 resistance level. But there could be a bit of pull-back to about $1,250-$1,260,” said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.
“By the end of June, I think $1,300-$1,400 should be relatively a reasonable price for gold.”
Among other precious metals, silver fell 0.7 per cent to $17.35 and platinum was down 0.1 per cent to $966.49.
Palladium, which touched its lowest since May 25 on Friday, climbed 0.8 per cent to hit $535.72.