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PRECIOUS-Gold hits near six-week highs ahead of Fed statement, Brexit vote

Published 15/06/2016, 05:03 am
© Reuters.  PRECIOUS-Gold hits near six-week highs ahead of Fed statement, Brexit vote
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* Two-day Fed meeting begins

* Brexit fears weigh on sterling, euro

* Silver hits fresh one-month high

* Coming up: FOMC statement Wednesday at 2 p.m. EDT (1800 GMT) (Updates prices; adds comment, second byline, NEW YORK dateline)

By Marcy Nicholson and Clara Denina

NEW YORK/LONDON, June 14 (Reuters) - Gold hit its highest in almost six weeks on Tuesday, rising on worries about a potential British exit from the European Union and expectations the U.S. Federal Reserve will not raise interest rates at its June meeting.

Spot gold XAU= rose as high as $1,289.80 an ounce earlier and was up 0.1 percent at $1,285.06 an ounce by 2:51 p.m. EDT (1851 GMT).

U.S. gold futures GCv1 settled up 0.1 percent at $1,288.10 an ounce.

Gold priced in sterling XAUGBP=R hit a near three-year high of 913.09 pounds as the British currency fell to its lowest in eight weeks.

Gold could get a further boost if a vote by Britain to leave the 28-member group, dubbed "Brexit", pushes Europe back into a recession, analysts said.

"The Brexit vote is obviously key to gold's appreciation because of the polling suggesting the 'Leave' campaign is gathering momentum, creating uncertainty over the outcome," ETF Securities analyst Martin Arnold said.

Polls and bookmakers' odds showed a rising chance of Brexit in the June 23 referendum as Britain's largest tabloid newspaper, the Sun, also said it was backing a "Leave" vote. MKTS/GLOB

Bullion, which is often perceived as a hedge against economic and financial uncertainty, has been driven by rising investor risk aversion before central bank meetings this week.

The Federal Reserve is expected to keep interest rates on hold for at least another month in a two-day meeting that began on Tuesday.

"The second thing is the Fed meeting today and tomorrow ... and as long as the Fed is unclear with the timing of the rate hike, that's a good environment for gold," Arnold said.

Gold is sensitive to interest rates changes, with increases mostly signaling a rise in the opportunity cost of holding the non-interest yielding metal.

"The 'no hike' is likely being priced in but we could see gold hit the $1,300 level prior to a correction on the way to the next level of resistance at $1,400," said Mark O'Byrne, director of Dublin-based gold dealer GoldCore.

The Bank of England, Swiss National Bank and the Bank of Japan will also meet this week, and are expected to hold monetary policies steady given caution about the global economic outlook.

On Monday, holdings in SPDR Gold Trust GLD , the world's largest gold-backed exchange-traded fund, rose to the highest since October 2013. GOL/ETF

Spot silver XAG= fell 0.2 percent to $17.39 per ounce, after touching a one-month high of $17.48.

Spot platinum XPT= was down 1.4 percent at $971.06, while palladium XPD= fell 01.7 percent to $530.89.

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