Gold prices hit four-week highs on Monday, pushed higher by the weakening dollar, a difficult session for Asian stocks and growing concerns that Europe's fragile economy will be roiled by Britain's exit from the European Union.
Spot gold traded Monday at $1,286.40, up $10.80, or 0.85% on Monday, its highest level since May 9. Gold has gained almost 20% since the start of the year as investors, including billionaire George Soros, snapped up gold funds and bought shares in gold mining companies at the expense of riskier assets.
The gold rally was given extra momentum Monday after Asian stocks fell the most in more than four months, translating to early losses across European market and expectations that U.S. equities will open lower. A leap in the value of the yen to the U.S. dollar also supported gold, which is seen as a hedge against dollar weakness. One greenback bought 106 yen on Monday, a level not seen since late 2014.
Analysts including DoubleLine Capital's Jeffrey Gundlach and ANZ's Daniel Hynes believe that gold could hit $1,400 or higher on expectations that the Fed will roll back interest rate hikes due to global concerns and weaker economic growth at home and if Britain votes to leave the EU in a referendum on June 23.
"If the 'leave campaign' is successful, the expected collapse in the GBP (British pound) and resultant market volatility would likely see investors seek safe haven assets," Hynes noted.
Recent opinion polls suggest that Britain will vote leave the EU, a move that the British Prime Minister David Cameron has warned could trigger recession in the world's fifth-largest economy.