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PRECIOUS-Gold hits 4-week high as Brexit vote shakes stocks

Published 14/06/2016, 05:11 am
© Reuters.  PRECIOUS-Gold hits 4-week high as Brexit vote shakes stocks
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* Stocks, dollar slip as risk appetite fades

* Gold priced in sterling hits highest since Sept. 2013

* Coming up: FOMC meeting June 14-15

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

By Marcy Nicholson and Jan Harvey

NEW YORK/LONDON, June 13 (Reuters) - Gold rose for the fourth straight session and hit its highest since mid-May on Monday, driven by rising investor risk aversion before central bank meetings this week and Britain's June 23 vote on whether to leave the European Union.

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

Spot gold XAU= was up 0.6 percent at $1,281.96 an ounce at 2:58 p.m. EDT (1858 GMT), off an earlier peak of $1,287. U.S. gold futures GCv1 for August delivery settled up 0.9 percent at $1,286.90 an ounce.

Fading expectations for a Federal Reserve rate hike have driven prices sharply higher so far this month. Gold has rallied 6 percent since U.S. payrolls data for May came in weaker than expected on June 3, crushing expectations for an interest rate hike over the summer.

"Following the labor 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 global stock markets lower. The dollar .DXY fell 0.2 percent against a basket of major currencies. MKTS/GLOB

"Gold has fluctuated in line with the Brexit opinion polls, even dislocating it from its usual primary link with the U.S. dollar," Citi said in a note on Monday.

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. Chief Investment Office Wealth Management Research said in a note that it has gone overweight platinum and underweight gold, each by 2 percent. It said it is capitalizing on firmer industrial activity in platinum while eyeing negative short-term catalysts for gold, such as the market's "overly pessimistic" pricing of U.S. rates and expectations for the U.S. dollar weakness to reverse.

On Friday, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Shares GLD , rose to the highest since October 2013.

Among other precious metals, silver XAG= was up 0.1 percent at $17.34 an ounce, while platinum XPT= was down 0.6 percent at $984.53 an ounce and palladium XPD= was 0.8 percent lower at $538 per ounce.

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