LONDON: Gold rallied to a two-year peak after the US Federal Reserve sounded a less dovish note after its latest policy meeting, with the metal reaching three-year highs in euro and sterling terms ahead of Britain’s vote on whether to leave the European Union.
The June 23 referendum has dented appetite for assets viewed as higher risk and sent investors scurrying for bonds and gold.
Spot gold was up 1.4 percent at $1,308.91 an ounce by 1355 GMT, while US gold futures for August delivery gained $24.20 to $1,312.50.
Spot prices have bounced 7 percent this month after sliding to a 3-1/2 month low on May 30.
Sterling-denominated gold rose 2 percent to a three-year high of 931.27 pounds an ounce, while gold priced in euros reached its highest since April 2013 at 1,176.22 euros.
Among other precious metals, silver rose 1.2 percent to $17.72 an ounce, platinum gained 1.3 percent to $982.91 and palladium was up 0.4 percent at $533.96.
Expectations that the US central bank would press ahead with interest rate increases over the summer faded earlier this month after the release of weak US payrolls data for May.
“The US job report took us from the lows on June 3. Brexit worries then gave us the next boost and yesterday the FOMC provided enough dovish ammunition for it to make a new high,” said Saxo Bank’s head of commodity research, Ole Hansen.
The Fed signalled on Wednesday that it still plans to raise rates twice this year but said that slower economic growth would crimp the pace of tightening in future years.
That sparked a jump in the price of gold, which is highly sensitive to rising rates that lift the opportunity cost of holding non-yielding assets such as bullion while boosting the dollar, in which it is priced.
“The longer the Fed is seen as delaying a rate hike, the better for gold,” HSBC said in a note.
Momentum picked up further after the Bank of Japan held off from expanding monetary stimulus, prompting a more than 2 percent rally in the yen versus the dollar.
The US currency was later up nearly 1 percent against the euro, while European shares hit a four-month low and oil prices headed for a sixth session of losses. Holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Shares, rose 0.23 percent to 900.75 tons on Wednesday, the highest since October 2013.
The June 23 referendum has dented appetite for assets viewed as higher risk and sent investors scurrying for bonds and gold.
Spot gold was up 1.4 percent at $1,308.91 an ounce by 1355 GMT, while US gold futures for August delivery gained $24.20 to $1,312.50.
Spot prices have bounced 7 percent this month after sliding to a 3-1/2 month low on May 30.
Sterling-denominated gold rose 2 percent to a three-year high of 931.27 pounds an ounce, while gold priced in euros reached its highest since April 2013 at 1,176.22 euros.
Among other precious metals, silver rose 1.2 percent to $17.72 an ounce, platinum gained 1.3 percent to $982.91 and palladium was up 0.4 percent at $533.96.
Expectations that the US central bank would press ahead with interest rate increases over the summer faded earlier this month after the release of weak US payrolls data for May.
“The US job report took us from the lows on June 3. Brexit worries then gave us the next boost and yesterday the FOMC provided enough dovish ammunition for it to make a new high,” said Saxo Bank’s head of commodity research, Ole Hansen.
The Fed signalled on Wednesday that it still plans to raise rates twice this year but said that slower economic growth would crimp the pace of tightening in future years.
That sparked a jump in the price of gold, which is highly sensitive to rising rates that lift the opportunity cost of holding non-yielding assets such as bullion while boosting the dollar, in which it is priced.
“The longer the Fed is seen as delaying a rate hike, the better for gold,” HSBC said in a note.
Momentum picked up further after the Bank of Japan held off from expanding monetary stimulus, prompting a more than 2 percent rally in the yen versus the dollar.
The US currency was later up nearly 1 percent against the euro, while European shares hit a four-month low and oil prices headed for a sixth session of losses. Holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Shares, rose 0.23 percent to 900.75 tons on Wednesday, the highest since October 2013.
