June 28, 2016 / 9:46 AM / 3 years ago

PRECIOUS-Gold slips as investors cash in gains from Brexit vote

* Gold falls 1 pct after biggest two-day rally since 2008
    * Global stocks rebound for first time in three days
    * Sterling climbs off 31-year low vs the dollar
    * GRAPHIC-2016 asset returns: reut.rs/1WAiOSC

 (Updates prices; adds comment, second byline, NEW YORK
dateline)
    By Marcy Nicholson and Jan Harvey
    NEW YORK/LONDON, June 28 (Reuters) - Gold fell more than 1
percent on Tuesday as buyers cashed in gains from the biggest
two-day rally in the metal since late 2008, made in the wake of
Britain's shock vote to leave the European Union last week.
    The metal jumped to its highest in more than two years at
$1,358.20 an ounce on Friday after the UK referendum vote, and
to more than three-year highs in euro and sterling terms. It
quickly retreated from that peak, however.
    Spot gold was down 1 percent at $1,311.60 an ounce at
3:15 p.m. EDT (1915 GMT), off an earlier low of $1,305.23.
Bullion was on track to finish June up 8 percent and the second
quarter up more than 6 percent.
    U.S. gold futures for August delivery settled down
0.5 percent at $1,317.90.
    World stocks rose for the first time in three days and
sterling and the euro strengthened as investors snapped up
assets hurt by some of the biggest falls since the 2008 collapse
of Lehman Brothers.  
    "Gold is taking a well-deserved breather," Saxo Bank's head
of commodity strategy said. "Risk appetite is returning for now
and with that, worries about the very rapid build-up of long
positions leading up to Brexit."
    European leaders told Britain on Tuesday to act quickly to
resolve the political and economic chaos unleashed by its vote
to leave the European Union, a move the IMF said could put
pressure on global growth. 
    Among currencies, sterling rose from 31-year lows against
the dollar while the euro climbed 0.3 percent against the U.S.
currency. 
    "We believe that Britain's forthcoming exit from the EU
will, on balance, remain positive for gold," said Metals Focus
in a note, adding, however, that short-term downside risks to
the gold price have developed.
    "If we have news that there is stress in the financial
system, which might make people think we are moving into a
Lehman-like moment, that could trigger higher gold prices,"
Julius Baer analyst Carsten Menke said. 
    Holdings in SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, climbed to the highest since
July 2013, on Monday. 
    Spot silver rose 0.2 percent to $17.75 an ounce.
    "From a technical perspective, silver looks poised for
further gains," said Fawad Razaqzada, technical analyst for
Forex.com.
    "Following last week's Brexit vote, silver formed a large
bullish engulfing candle on its daily chart on Friday."
    Platinum was up 0.3 percent at $977.21 and palladium
 was 2.6 percent higher at $569.65.

    
 (Additional reporting by Vijaykumar Vedala in Bengaluru;
Editing by David Goodman  and Marguerita Choy)
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