Gold Rises on Safe Haven Demand

Gold hit its highest since mid-May on Monday, driven higher by a retreat of the dollar and as stocks were knocked by rising risk aversion before key central bank meetings this week and a June 23 vote on whether Britain should leave the European Union.

The pound fell to a two-month low against the dollar, pushing gold denominated in sterling to its highest in nearly three years at 909.83 pounds an ounce, up 1.9 percent.

Spot gold was up 0.9 percent at $1,284.76 an ounce at 1145 GMT, off an earlier peak of $1,286.30. U.S. gold futures for August delivery were up $11.90 an ounce at $1,287.80.

Fading expectations for a Federal Reserve rate hike have driven prices sharply higher so far this month. Gold has rallied 6 percent since U.S. payrolls data for May came in weaker than expected on June 3, crushing expectations for an interest rate hike over the summer.

“Following the labour market report a Fed rate hike has been priced out for June and July, and at the same time it seems as if odds for the UK to leave the European Union have come back up again,” Danske Bank analyst Jens Pedersen said.

“Those two factors are benefiting gold.”

via Reuters

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, he established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza