Gold touched a four-week high on Monday, supported by a weaker dollar and a slide in Asian stocks ahead of key central bank meetings this week and a June 23 referendum on Britain’s exit from the European Union.
The US Federal Reserve, 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 about a possible “Brexit”.
Often perceived as a hedge against economic and financial uncertainty, gold has so far gained 5 per cent in June and 20 per cent for the year. Spot gold rose 0.6 per cent to $1,281.96 an ounce at 0647 GMT. Bullion earlier touched a session best of $1,284.20 an ounce, its highest since May 16. US gold was up 0.7 percent at $1,285.10.
“The market is full of uncertainty over Brexit and also over the interest rate decision by FOMC (the Federal Open Market Committee) as well as other regional concerns,” said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.
“Gold has been up and $1,300 should be an immediate target at least for the coming week, with $1,240 being the support level.”
Asian stocks fell the most in more than four months and the Japanese yen jumped on Monday as risky assets took a beating, boosting the precious metal. The dollar fell to a one-month low against the yen and stood at 106.03 yen, down about 0.9 percent. Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.74 percent to 893.92 tonnes on Friday, the highest since October 2013.
Speculators raised their net long position in COMEX gold contracts in the week to June 7, and cut their bullish stance in silver, U.S. Commodity Futures Trading Commission data showed.
“Gold could push a little higher during the early part of the week, but we expect it to hit some turbulence by Wednesday, the day of the Fed meeting,” said INTL FCStone analyst Edward Meir in a note.
“That is when we expect the bank to signal that it is warming up to a rate increase for July,” he said, adding a lack of a clear signal from the U.S. central bank could lead to further gains in gold. Among other precious metals, spot silver fell 0.5 per cent to $17.23 per ounce, while spot platinum was up 0.2 per cent at $991.51 per ounce and spot palladium rose 0.3 per cent to $544.16 per ounce.