Gold clocked up its biggest daily gain since the 2008 financial crisis on Friday as Britain's vote to leave the European Union spread political uncertainty and economic growth concerns, hitting industrial commodities such as oil and copper.
The 52 percent backing for leaving the 28-member bloc created the biggest global shock since the 2008 financial and economic crisis. [MKTS/GLOB]
The result reverberated worldwide, prompting more investors to park their cash in the safety of gold and shun assets that would be weakened by a slowing global economy. The dollar index, measured against a basket of currencies, rose its most in a day in six years
"Investors are looking for alternatives to risk exposure and both gold and the dollar are expressing that," said Doug Groh, co-portfolio manager at Tocqueville Gold Fund, a mutual fund with $1.5 billion invested in bullion and other precious metals.
"It is quite unique to see gold trade in conjunction with the dollar in strength, but it's not unusual perhaps given the circumstances."
In sterling terms, gold delivered double-digit percentage gains to top 1,000 pounds an ounce for the first time in more than three years, rallying as much as 21 percent in early trade, while euro-priced gold rose as much as 13 percent.
Spot gold was up 5 percent to $1,318 an ounce by 1:47 p.m. EDT (1705 GMT), on track to its biggest daily gain since November 2008. It rallied more than 8 percent earlier to $1,358.20, its highest since March 2014.
The dollar rose almost 2 percent against the euro, its biggest daily advance since Aug 2010, while sterling fell to 31-year lows as investors scrambled for protection in assets perceived as lower risk, such as U.S. Treasuries, the Swiss franc and yen.
News that Prime Minister David Cameron will step down raised further questions, as did national elections on Sunday in Spain, where Catalonia seeks independence.
"There are elections in France and Germany next year, but before then we've got the U.S. (presidential) election. Uncertainty is rife and gold is reflecting that," said Andrew Cole, a fund manager at Pictet Asset Management.
"What if (France's far-right National Front party leader) Marine Le Pen starts talking about a referendum, how will the French establishment avoid going down the UK route?"
Agricultural markets caught in the storm also fell, along with European coal and power markets. [GRA/]
Crude prices were down 4 percent, threatening to derail a three-month old recovery in global oil markets.
Brent crude was down $2.21 at $48.70 a barrel by 1:55 p.m. EDT (1755 GMT), falling 6 percent earlier to $47.54.
U.S. crude tumbled by $2.18 to $47.93. It was the largest one-day decline for U.S. crude since February.
"Our view is that we have not yet seen the low oil price of the day, with Brent likely to trade down towards $45 or lower before we have seen the worst of it," said Bjarne Schieldrop, chief commodity analyst at Nordic bank SEB.
But some argued that oil will not collapse like earlier this year, when supply was clearly more abundant than now. Despite Friday's retreat, crude prices held above last week's one-month lows when Brent hit a trough of $46.94 while U.S. crude tumbled to $45.83.
"There is no indication that the global financial market are anywhere near a meltdown as we saw in 2008," said Dominick Chirichella, senior partner at the Energy Management Institute in New York. "The UK will not collapse and the EU will not collapse anytime soon."
Similar optimism wielded for copper, which closed off earlier losses.
Three-month copper on the London Metal Exchange closed down less than 2 percent at $4,698 a tonne, after sliding as much as 4 percent earlier. Zinc and tin fall to three-week lows. [MET/L]