Gold rises to 4-week high before Fed meet

14/06/2016 02:11 AST

Gold hit its highest since mid-May on Monday, driven higher by a retreat of the dollar and as stocks were knocked by rising risk aversion before key central bank meetings this week and a June 23 vote on whether Britain should leave the European Union.

The pound fell to a two-month low against the dollar, pushing gold denominated in sterling to its highest in nearly three years at 909.83 pounds an ounce, up 1.9 per cent.

Spot gold was up 0.9 per cent at $1,284.76 an ounce at 1145 GMT, off an earlier peak of $1,286.30. US gold futures for August delivery were up $11.90 an ounce at $1,287.80.

Fading expectations for a Federal Reserve rate hike have driven prices sharply higher so far this month. Gold has rallied six per cent since US payrolls data for May came in weaker than expected on June 3, crushing expectations for an interest rate hike over the summer.

"Following the labour market report a Fed rate hike has been priced out for June and July, and at the same time it seems as if odds for the UK to leave the European Union have come back up again," Danske Bank analyst Jens Pedersen said.

"Those two factors are benefiting gold." Fears Britain is on the verge of voting to leave the European Union next week spread through global financial markets on Monday, sending Asian and European shares sharply lower.

The dollar fell 0.2 per cent against the euro. The Fed, Bank of England, Swiss National Bank and Bank of Japan will all meet this week, and are expected to hold monetary policy steady against a backdrop of caution about the global economic outlook as well as the impact of a possible Brexit.

Khaleej Times