Investing.com -- Gold fell to fresh two-week lows before paring some of the losses on Wednesday afternoon on the eve of the historic Brexit referendum in the U.K.
On the Comex division of the New York Mercantile Exchange, Gold for August delivery traded in a tight range between $1,263.50 and $1,273.40 an ounce, before settling at $1,270.25, down 2.25 or 0.18% on the session. It came one day after Gold tumbled more than 1.5% or $20 an ounce, while suffering its worst one-day loss in nearly a month. After hitting 22-month highs last week during a seven-day winning streak, Gold has responded with a current five-day losing skid. Despite the slight declines, the precious metal has still surged more than 19% since the start of the year and is on pace for its strongest first half in more than a decade.
Gold likely gained support at $1,199.00, the low from May 31 and was met with resistance at $1,316.40, the high from June 16.
On Wednesday, the FTSE 100 gained 57 points or 0.9% to 6,284, closing at a two-week high. With the continued gains, U.K. equities returned to a level from earlier this month before the "Leave" campaign in Thursday's highly-anticipated vote began to gain momentum. Analysts at UBS added a twist by offering predictions that the FTSE could plummet by 20% if the U.K. decides to leave the European Union. Billionaire investor George Soros said Tuesday that the British Pound could also fall 20% given such a scenario.
Over the last few months, prominent politicians and economists such as U.K. prime minister David Cameron, Germany chancellor Angela Merkel and International Monetary Fund managing director Christine Lagarde have issued stark warnings on the ramifications of a potential Brexit. At the same time, House of Commons Leader Chris Grayling, Culture Secretary John Whittingdale and former London mayor Boris Johnson have shown support for the Leave movement.
In Washington D.C., Federal Reserve chair Janet Yellen reiterated her stance that a vote supporting a Brexit could have serious consequences on the global economy and financial markets. In testimony on Capitol Hill, Yellen told the House Financial Services Committee that she has yet to schedule an emergency meeting at week's end in the likelihood that the Remain camp is defeated.
A Leave vote is regarded as bullish for gold, as investors pile into the safe-haven asset due to increased fears that a British departure from the European bloc could trigger a recession throughout the euro zone. Notably, it will take the U.K. a minimum of two years to leave the EU if the Leave campaign prevails.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.45% to an intraday low of 93.50, remaining near one-month lows. The index is down by more than 5% since early-December.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for July delivery inched up 0.001 or 0.01% to $17.320 an ounce.
Copper for July delivery gained 0.018 or 0.80% to $2.134 a pound.