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Gold races to 2-year high as investors seek refuge from Brexit

Published 25/06/2016, 04:58 am
© Reuters.  Gold races to 2-year high as investors seek refuge from Brexit
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* Gold surges as Brexit vote unleashes turmoil on markets

* Sterling-, euro-denominated gold soar as currencies plunge

* GRAPHIC-Gold vs currencies: http://link.reuters.com/cyv95s

* GRAPHIC-2016 asset returns: http://reut.rs/1WAiOSC (Updates prices; adds detail, second byline, NEW YORK dateline)

By Jan Harvey and Marcy Nicholson

LONDON/NEW YORK, June 24 (Reuters) - Gold soared as much as 8 percent to its highest in more than two years on Friday after Britain delivered a shock vote to leave the European Union, sending investors scurrying for protection in bullion and other assets perceived as lower risk.

In sterling terms, gold delivered double-digit percentage gains to top 1,000 pounds an ounce for the first time in more than three years, rallying as much as 21 percent in early trade, while euro-priced gold rose as much as 13 percent.

Spot gold XAU= peaked at $1,358.20 per ounce and was up 4.9 pct at $1,317.20 by 2:49 p.m. EDT (1849 GMT). U.S. gold futures GCv1 for August delivery settled up 4.7 percent at $1,322.4 per ounce, off an early high of $1,362.60 an ounce.

COMEX gold futures volume exceeded 576,850 contracts, their second highest on record. This represents 57.7 million ounces worth about $76.3 billion. benefits gold because in a general risk-off mode, it's a natural safe haven for everybody," Marie Owens Thomsen, chief economist at Indosuez Wealth Management, said.

"Now that the UK has voted to leave, we think there's a higher probability that the $1,350-1,360 per ounce level can be breached, and we're therefore looking for an extended target in the $1,400s."

Gold priced in sterling XAUGBP=R was last at 961.82 pounds an ounce, up 14 percent, having peaked at 1,019.03 pounds overnight. Euro-denominated gold XAUEUR=R was up 7.3 percent at 1,182.47 euros an ounce, off a high of 1,244.34 euros.

"This is just the beginning of pricing in the risk of Britain leaving the EU, and in the longer term, whether other countries will try to leave or even if the EU will survive," said Joe Foster, portfolio manager and strategist of VanEck International Investors Gold Fund in New York.

Gold dealers in London reported surging demand for coins and bars among retail investors on Friday, with some saying stocks were tight. vote to leave the European Union forced the resignation of Prime Minister David Cameron and dealt the biggest blow to the European project of greater unity since World War Two. stock markets lost about $2 trillion in value while sterling suffered a record one-day plunge to a 31-year low. MKTS/GLOB

The single currency was under pressure as investors worried that the Brexit vote could encourage similar movements in other European countries. FRX/

U.S. short-term interest rates futures hit contract highs in early U.S. trading, boosting expectations the Federal Reserve may cut interest rates to help shield the economy from any global fallout. isn't necessarily about Britain, it's about uncertainty in the world's largest economy," Amanda van Dyke, fund manager at Peterhouse Asset Management, said.

"The general commentators are suggesting that the Fed is no longer going to raise rates because the dollar is soaring, and they can no longer afford for the dollar to keep going as fast as it is."

Silver XAG= was up 2.65 pct at $17.73 an ounce, while platinum XPT= was up 1.83 pct at $977.60. Palladium XPD= , the most industrial of the major precious metals, bucked the trend to fall 2.80 pct at $548.20 an ounce.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ GRAPHIC-Gold vs currencies:

http://link.reuters.com/cyv95s GRAPHIC-2016 asset returns:

http://reut.rs/1WAiOSC

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