Gold races to 28-month high, oil pressured as Brexit fears return

MANILA (Reuters) - Gold rallied to its highest since 2014 on Wednesday and oil struggled to recover from deep losses, as renewed fears over the impact of Britain’s exit from the European Union pushed investors toward safe havens.

One-gram gold bars are displayed at the annual meeting of German Sparkasse savings banks in Duesseldorf, Germany, April 27, 2016. REUTERS/Wolfgang Rattay

Risk aversion gripped markets - Asian stocks tumbled and sterling plumbed a 31-year low - amid worries global efforts to boost liquidity may not be enough to cushion the impact of Brexit. Copper moved away from a two-month high and Chinese commodities were sold off, led by agriculture and iron ore.

Concerns that financial and political instability in Italy could lead to even more chaos in Europe spooked investors further. [MKTS/GLOB]

“The market is beginning to focus on the wider euro zone risk,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.

Underlining strong appetite for gold, seen as a safe-haven during economic uncertainties, open interest in Comex futures and holdings in the top gold-backed exchange-traded fund rose to multi-year highs.

Spot gold surged to $1,371.40 an ounce, the highest since March 2014, and was up 0.8 percent at $1,367 by 0646 GMT. Comex gold futures rose 0.7 percent to $1,368.80 as open interest topped 640,000 lots, the most since November 2010.

“The general bullish sentiment for gold coupled with the post-Brexit uncertainty continues to underpin the metal and the complex as a whole,” wrote MKS Group trader James Gardiner.

Holdings by SPDR Gold Trust rose to 31.6 million ounces, the biggest in three years.

The flight to gold picked up speed on reports three British commercial property funds worth about 10 billion pounds had suspended trading within 24 hours.

Oil futures struggled to rebound from big losses overnight as Brexit worries, combined with indications that output by the Organization of the Petroleum Exporting Countries (OPEC) hit a record high in June, dragged on prices.

Brent crude was steady at $47.97 a barrel after losing 4.3 percent on Tuesday. West Texas Intermediate was flat at $46.61, having slid 5 percent overnight. [O/R]

“You have the dollar strengthening, risk aversion rising because of the ongoing Brexit saga and then there are the actual supply and demand aspects to consider on top of all this,” Fawad Razaqzada, market analyst for, said in a note.

In metals, London copper dropped further below Monday’s two-month high to trade at $4,805 a tonne, also hurt by rising inventories. But nickel outperformed, gaining 1.4 percent to $9,840 on potential supply disruption from top ore exporter Philippines to No.1 market China.

In China, iron ore fell nearly 3 percent to 424.50 yuan a tonne, in another setback for the glut-hit market. Soymeal, soyoil and palm olein each fell around 4 percent.

Rubber slid 6 percent in Shanghai and 4 percent in Tokyo.

Reporting by Manolo Serapio Jr.; Editing by Himani Sarkar