Gold heads for fifth week of gains, silver soars

[NEW YORK] Gold rose one per cent on Friday and was heading for its fifth weekly gain, supported by a weaker US dollar and prospects for further monetary policy easing in the wake of Britain's vote to leave the European Union.

Safe-haven demand for the metal spurred most of the gains as investors rushed to protect themselves against the uncertainty in the lead up to Britain's shock vote to exit the European Union, dubbed 'Brexit'.

Concerns over the trajectory of global growth, dovish comments from the US Federal Reserve Chair Janet Yellen and retail demand had supported gold ahead of last week's Brexit vote.

Spot gold rose to a session high of US$1,341.40 an ounce, and was 1.2 per cent higher at US$1,337.6 by 2:23 pm EDT (1808 GMT). The metal gained 8.8 per cent in June, its biggest monthly rise since February. US gold futures for August delivery settled up 1.4 per cent at US$1,339.

Gold's strength benefited silver, which breached the US$19 an ounce level for the first time since September 2014. It rose as much as 5 per cent to US$19.64 and traded 4.9 per cent higher at US$19.61. Silver was on track for its best week since August 2013.

"The US dollar, and therefore buck-denominated precious metals, will be in focus again next week as the attention turns away from Brexit slightly and more towards economic fundamentals and US monetary policy," Fawad Razaqzada, market analyst for forex.com, said in a note.

The US dollar fell 0.5 per cent against a basket of six currencies, while European stocks recovered on signs that central banks such as the Bank of England, the Bank of Japan and the European Central Bank will loosen monetary conditions even further.

Concerns about the global economy have made chances of a US rate rise in coming months less likely, analysts say, but much will depend on US economic data and markets will be watching non-farm payrolls due on July 8 in particular for clues.

A strong jobs report and favourable revisions for the June nonfarm payrolls data could give the US dollar a boost and undermine gold and silver, at least temporarily, Mr Razaqzada said.

Low US interest rates are positive for gold because the opportunity cost of holding it decreases and the US dollar typically falls, making the metal cheaper.

Societe Generale raised its gold price forecasts on Thursday on concerns about the ongoing political, financial and economic fallout of Britain's vote last week to leave the European Union.

"Looking ahead, it seems that gold will remain one of the major beneficiaries in the current backdrop, as heightened volatility and lingering uncertainty will keep investors' risk appetite in check." the bank said.

Platinum marked its highest level since May 18 rising as high as US$1,055 an ounce and was on track for its best weekly rise since October last year.

Palladium, heading for its best week since early March, rose to its highest since May 13 at US$605.40, and was up 1.2 per cent at US$602.05.

REUTERS