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PRECIOUS-Gold slips more than 1 pct as Brexit campaign loses momentum

Published 21/06/2016, 05:00 am
© Reuters.  PRECIOUS-Gold slips more than 1 pct as Brexit campaign loses momentum
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* Gold falls after biggest one-day gain in two weeks

* Polls show 'Remain' regaining momentum in Brexit vote

* 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 20 (Reuters) - Gold fell on Monday after polls showed the campaign for Britain to remain in the European Union regaining some momentum, sharpening appetite for assets seen as higher risk and sparking a sharp rally in stocks.

Speculation that British voters could opt to leave the trading bloc in a referendum on Thursday helped push gold to its highest in nearly two years last week, and to three-year peaks in euro and sterling terms.

However, three opinion polls ahead of the vote showed the "Remain" camp recovering some momentum, although the overall picture was still one of an evenly split electorate. That helped pull gold back from its highs. gold XAU= was down 0.8 percent at $1,288.50 an ounce at 2:46 p.m. EDT (1846 GMT), off an earlier low of $1,277.34 an ounce, while U.S. gold futures GCv1 for August delivery settled down 0.2 percent at $1,292.10 an ounce.

"This is all related to Brexit, with a few talking of the UK not leaving," said Afshin Nabavi, head of trading at MKS in Switzerland.

Two weekend polls showed "In" retaking the lead and another showed the "Out" campaign's lead narrowing. Bookmakers' odds have shown those wishing to stay in the EU ahead and Betfair put the implied probability of a vote to "Remain" at 72 percent on Monday, up from 60-67 percent on Friday.

Global stocks rallied and sterling strengthened broadly. MKTS/GLOB

"CPM expects gold prices to come off after the British referendum Thursday, regardless of the outcome," said CPM Group in a note.

"It might come off more on a Remain vote and less on an Exit vote, but we expect it will come off sharply."

As of June 14, hedge funds and money managers held the biggest net long position in COMEX gold in nearly five years. had a few days at the beginning of last week when the odds of a 'Leave' vote were getting higher than a 'Remain' vote, which prompted a sharp rally," Capital Economics analyst Simona Gambarini said.

"Now we're in a situation where we're getting a little bit more even, so you see a bit of steam coming out of the gold price."

Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Shares GLD , rose to the highest since September 2013 on Friday. GOL/ETF

Silver XAG= was down 0.1 percent at $17.46 an ounce and platinum XPT= was 1.8 percent higher at $984.86. Palladium XPD= , which touched its lowest since May 25 on Friday, was up 2.5 percent at $544.76 an ounce.

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