Gold has risen one per cent, recovering from its lowest in nearly two weeks, as prospects for further economic stimulus helped to bolster investor appetite while the US dollar remain flat. Accommodative monetary policies favour gold as well as equities because low interest rates encourage investors to opt for assets that do not rely on interest yields.
Spot gold was up 0.8 per cent at $US1,342.41 an ounce by 3:20 pm EDT (0520 Thursday AEST), having earlier touched $US1,327.30, its lowest since July 1. Bullion had fallen by 1.7 per cent on Tuesday, its biggest one-day drop since May 24. US gold settled up 0.6 per cent at $US1,343.6 per ounce.
"Gold prices can continue to benefit from an uncertain economic picture for the UK and Europe after the Brexit vote and also from any quantitative easing, which also means low interest rates," Natixis analyst Bernard Dahdah said.
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Gold has gained about $US100 an ounce since Britain voted to leave the European Union, with worried investors piling their cash into safe-haven assets. The US dollar, in which gold is priced, fell 0.2 per cent against a basket of six currencies.
"Gold (is) responding to the US dollar dropping a bit here today. obviously the unknown is the probability of a Fed rate increase, which could however not happen this year, helping the metal's price ascent," Societe Generale analyst Robin Bhar said.
Holdings of SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, fell 1.63 per cent to 965.22 tonnes on Tuesday, its biggest one-day decline since December 2. Palladium outperformed the other precious metals and soared as much as 3.6 per cent to $US647.20 an ounce, the highest since November 2015. "The market's thinking China's going to get more stimulus," Melek said, noting that auto sales in China went up in June. Platinum, which fell for the first time in two weeks in the previous session, rebounded 0.9 per cent at $US1,095.60. Silver, meanwhile, gained 1.2 per cent to $US20.36.