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Gold hits two-week low as Britain votes on EU membership

People leave a polling station in Belfast, Northern Ireland, on June 23, 2016, as the United Kingdom holds a referendum to vote on whether to remain in, or to leave the European Union (EU).
Paul Faith | AFP | Getty Images
People leave a polling station in Belfast, Northern Ireland, on June 23, 2016, as the United Kingdom holds a referendum to vote on whether to remain in, or to leave the European Union (EU).

Gold fell to a two-week low on Thursday as the last sweep of opinion polls before Britain's referendum on EU membership began gave the campaign to stay in the bloc a slight edge.

Britons were voting on Thursday in the referendum that has divided the nation. The polling will close at 5 p.m. EDT (2100 GMT), with results expected early on Friday.

Spot gold was down 0.33 percent at $1,261.70 an ounce after hitting $1,257.91, its lowest since June 9. U.S. gold futures settled down 0.5 percent at $1,263.10 per ounce, and last traded down 0.46 percent at $1,264.40.

"The market is certainly on hold," said David Meger, director of metals trading for High Ridge Futures in Chicago. "The tilt right now is towards that camp of remaining. Under that premise, we realize there would be a lesser need for safe-haven assets, such as gold."

This can change "very rapidly if that expectation is not met," Meger said, adding that if Britons vote to leave, he would expect a knee-jerk rally in bullion prices.

The metal is often perceived as a hedge against economic and financial uncertainty. "In case of a "Leave" win, any rise in gold would not be long lasting because this would not result in a deep economic or financial crisis," said Julius Baer analyst Carsten Menke, adding that a "Remain" vote would see prices fall towards the $1,200 mark.

Polls by ComRes, conducted for the Daily Mail newspaper and ITV television, and by YouGov for The Times newspaper in London, showed a last-minute rise in support for Britain to remain in the EU.

In wider markets, sterling hit a 2016 high against the dollar and world stocks climbed for a fifth day running.

Investors piled on near-term bullish and bearish options bets on Wednesday, racing to protect against price swings during Britain's vote, data showed.

The outcome of Britain's referendum could also influence the U.S. Federal Reserve's decision to lift interest rates sooner rather than later, analysts said.

"A remain vote could give the Fed more confidence to raise rates... and the next nonfarm jobs report will be the next focus for the market," Danske Bank senior analyst Jens Pedersen said.

Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose to the highest since September 2013, on Wednesday.

Among other precious metals, silver futures rose 0.34 pct to $17.37 an ounce and platinum futures were down 1.53 pct at $968.50. Palladium futures rose 0.4 pct at $562 an ounce.