Gold fell on Tuesday as investors opted to book profits, after the yellow metal traded near the highest since July 2014, buoyed by safe-haven demand after global stock markets plummeted in the wake of Britain’s decision to exit the European Union.
Gold in the previous session extended gains from Friday when it closed up 4.8 per cent at $1,315.48 an ounce, the most since July 2014 and the biggest one-day gain since January 2009 as the British vote prompted investors to turn to safer assets.
Investors, however, scooped up beaten down assets on Tuesday as sterling and Asian emerging market currencies regained some footing and crude oil bounced, bringing down the demand for gold.
The safe haven asset is often perceived as a hedge against economic and financial risk.
Spot gold was down 0.6 per cent at $1,316.80 an ounce by 0400 GMT. It rose 0.7 per cent on Monday.
US gold slipped 0.3 per cent to $1,320.50.
“So far it has mainly been Chinese selling. They have been good sellers the whole way up, especially when we passed $1,300. We continue to see decent selling from them,” said MKS Group trader Alex Thorndike.
“It seems like the market is pausing here a bit now considering the moves we have seen since Friday. But in a couple of weeks I think we could see prices in the $1,375-$1,400 range.”
British bank Standard Chartered, however, said the gold rally has lost its momentum and it would be difficult for the metal to float above $1,300 an ounce.
“Once the immediate short-run rush to safety subsides and assuming effective policy responses to allay capital market concerns, we think gold will struggle to stay above $1,300/oz during Q3, and will push back down towards USD 1,250/oz,” the bank said in a note.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 1.40 per cent to 947.38 tonnes on Monday, the highest since July 2013.
Among other precious metals, spot silver was down 0.6 per cent to $17.61 per ounce.
Silver may break a resistance zone of $18.12 to $18.84 per ounce and rise into a range of $21.09 to $22.07 over the next three months, as indicated by a few Fibonacci retracement analyses, Reuters technical analyst Wang Tao said.
Platinum rose 0.3 per cent to $976.90 an ounce and palladium was up 0.1 per cent at $555.40.