Gold gains for second day as nervous investors rush into the safe-haven

Jessica Morris
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Goldman Sachs hiked its gold price forecasts (Source: Getty)

Gold surged for a second day as nervous investors sought refuge from a storm rippling through financial markets following the UK's vote to leave the European Union.

Spot gold swelled 0.76 per cent to $1,325.70 an ounce this morning, while US gold added 0.55 per cent to $1,329.70. The precious metal has risen nearly 25 per cent since the start of this year, after the fallout from Brexit sent sterling tumbling.

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Chancellor George Osborne said earlier today that the Brexit vote would amplify volatility on financial markets, while trading was suspended in London-listed banking giants Barclays and RBS after they tanked by more than 10 per cent.

Big banks have said that the referendum outcome is likely to delay the US Federal Reserve's ambition for two interest rate rises this year, which would be a boon for gold.

HSBC believes "gold may reach $1,400 an ounce on a 'safe-haven' bid generated by the UK vote ... it's even possible that gold may trade higher longer term if the UK vote creates wider EU concerns."

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Goldman Sachs also hiked its gold price forecasts, saying that the Brexit vote would create a more sustainable impact on the trajectory of US interest rate rises.

According to Macquarie Research: "Gold prices will go higher in the third quarter as the full ramifications of Brexit begin to be felt but expect it to fall back in the fourth quarter after the US election and as the Fed gets ready to hike again".

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