Gold up more than 1% as Brexit's Leave camp posts strong showing in early results

Gold has swung sharply between gains and losses on Friday morning (June 24) as investors sought to anticipate the Brexit vote result.
Gold has swung sharply between gains and losses on Friday morning (June 24) as investors sought to anticipate the Brexit vote result.PHOTO: REUTERS

MANILA (Reuters, Bloomberg) - Gold rose more than 1 per cent on Friday after the British referendum vote count showed a stronger-than-expected vote in favour of Britain leaving the European Union.

Spot gold was up 0.8 per cent at US$1,265.61 an ounce by 2329 GMT GMT, after rising as high as US$1,268.76 earlier.

US gold for August delivery rose 0.5 per cent to US$1,268.90.

According to official results, 61.3 per cent of voters in Sunderland backed leaving the bloc, above the 56.5 per cent predicted by J.P. Morgan in an analysis published before the vote.

Gold has swung sharply between gains and losses on Friday morning (June 24) as investors sought to anticipate the outcome of Britain's vote on membership of the European Union.

With counting under way, bullion for immediate delivery first lost as much as 0.5 per cent to US$1,250.89 an ounce, then surged 1.1 per cent to US$1,271.13, according to Bloomberg generic pricing.

Prices have weakened from near a two-year high last week as expectations that the referendum would endorse the status quo have strengthened, hurting demand for haven assets.

While bookmaker Paddy Power Betfair indicated a 92 per cent probability of a vote to stay, the early results from cities in the northeast of England showed greater support for leaving the bloc than academics had forecast.

Until the overall result is finally out "it could be a volatile day for gold, particularly if it looks like it will be a close outcome," said Shane Oliver, the Sydney-based head of investment strategy at AMP Capital Investors. "Gold will likely see more downside if 'Remain' does win, at least back to support at around US$1,200 or maybe even US$1,176."

The pro-EU camp won 51 percent of the vote in Newcastle, smaller than the forecast 12 percentage-point lead.In Sunderland, a higher-than-expected 61 per cent voted in favor of an exit.

After those results were announced, gold gained with the yen as the pound sank. Should Britain stay in the EU, gold investors may shift attention back toward the outlook for US interest rates.