Spot gold prices have been trading flat at around $1,267 an ounce, after failing to decisively breach $1,300 an ounce in May, but in a note on Friday ANZ commodity strategist Daniel Hynes pointed to two elements that would likely give prices of the precious metal room to grow.
He noted comments this week from U.S. Federal Reserve Chair Janet Yellen that tamped down expectations of aggressive rate hikes this year, and as well as the expansionary, low or negative interest rate monetary policies being pursued in in Japan and Europe.
Gold prices gained more than 16 percent in the first four months of 2016 and tested the key $1,300 an ounce level in May but have since backtracked somewhat, mirroring market expectations for a Fed rate hike. Gold typically falls as interest rates rise because it is not an interest-yielding instrument.
Thirdly, risk aversion prompted by the Brexit vote — which Hynes called "a real watershed moment" for the precious metal — could push gold to $1,400 an ounce, he said.
The U.K. will hold a referendum on June 23 on whether to stay in or leave the European Union (EU), with opinion polls currently leaning very slightly toward the "stay" side.
"If the Leave campaign is successful, the expected collapse in the GBP and resultant market volatility would likely see investors seek safe haven assets," Hynes said.