Gold fell over 1 per cent on Monday, after registering its biggest one-day gain in two weeks in the previous session, easting on indications that Britain could opt to remain in the European Union in a referendum later this week.
Three opinion polls ahead of Thursday’s vote showed the ‘Remain’ camp recovering some momentum, although the overall picture remained one of an evenly split electorate.
The surveys boosted Asian stocks and sterling, and increased investors’ appetite for risk assets, hurting gold.
A vote by Britain to leave the 28-member EU, dubbed “Brexit’’, could tip Europe back into recession, putting more pressure on the global economy and thus boosting the safe haven appeal of bullion.
Spot gold, US gold
Spot gold dropped 1.1 per cent to $1,283.80 an ounce by 0358 GMT, after touching a low of $1,280.80 earlier in the session.
Bullion rose about 1.5 per cent on Friday, it biggest single day gain since June 3. US gold slid 0.6 per cent to $1,286.70.
“We have to suspect that markets will remain quite choppy in the lead up to the British vote and in gold’s case, the path of least resistance will likely be higher,” INTL FCStone analyst Edward Meir said in a note.
“There could be a “post-vote” let down on Friday and heading into the following week, especially if investors realise that a ‘Leave’ vote is not going to have the Armageddon-like ending many are fearing.”
SPDR Gold Trust
However, with a lot of volatile trading expected ahead of the Brexit vote, there was some optimism for bullion as holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.59 per cent to 907.88 tonnes on Friday, the highest since September 2013.
Hedge funds and money managers took their bullish stance in gold to the highest in nearly five years in the week to June 14, US government data had showed on Friday.
“The best case scenario for gold in the coming few days is that it stabilises at the current level just ahead of the $1,300 resistance level. But there could be a bit of pull-back to about $1,250-$1,260,” said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.
"By the end of June, I think $1,300-$1,400 should be relatively a reasonable price for gold.” Among other precious metals, silver fell 0.8 per cent to $17.34, while platinum rose 0.3 per cent to $970.90 and palladium climbed 1.1 per cent to reach $537.15.