Picture: REUTERS
Picture: REUTERS

Bengaluru — Gold rose to a near two-week peak on Wednesday, holding above the key $1,300 mark as uncertainty over Britain's exit from the European Union drove investors to safe haven assets.

Spot gold was up 0.5% at $1,308.15 an ounce, at 11.07am GMT, having hit its highest since March 1 at $1,308.98. US gold futures rose 0.8% to $1,308.50.

The Brexit vote on Tuesday has given gold a bit of lift, said Quantitative Commodity Research analyst Peter Fertig. “We have speculators all over the world betting that retail clients are going to buy gold because they could be fearing a hard Brexit, which is now more likely, and they would like to be protected against the negative consequences.” 

UK Prime Minister Theresa May suffered a second defeat for her Brexit plan, plunging Britain deeper into a political crisis before the planned EU departure date on March 29.

Bullion, considered a refuge in times of political and economic uncertainty, has gained about 13% since touching more than one-and-a-half year lows in August last year.

“The fact that gold has breached the $1,300 threshold represents a positive signal, opening space for further gains,” ActivTrades chief analyst Carlo Alberto De Casa said in a note.

British MPs are now expected to reject a no-deal Brexit in a vote at 7pm GMT, and are then due to vote again on Thursday on whether to ask for a delay to Brexit, something to which all the EU’s other 27 members must agree.

World shares slipped amid mounting concern over world growth and trade, while the dollar index fell against a basket of currencies.

Adding to gold’s appeal were growing concerns over global economic growth. Modest US inflation numbers added to a slew of lacklustre economic data from the country, supporting the US Federal Reserve’s “patient” stance on rate hikes. Higher rates tend to reduce investor interest in non-yielding bullion.

Investors are also keeping a close eye on next week’s Fed meeting and clarity on the US-China trade front.

Holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose about 0.4% on Tuesday, a second straight day of gains.

Among other precious metals, palladium was up 0.5% at $1,549 an ounce, while platinum fell 0.4% to $834. Silver climbed 0.5% to $15.52 an ounce, having earlier touched its highest since March 1.