Gold, silver climb on dollar and appetite for security

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Gold rose on Wednesday as the dollar retreated and investor appetite for safe assets remained strong because of longer-term financial uncertainty after Britain's surprise vote to leave the European Union.

Silver rose to a 1-1/2-year high, while platinum and palladium each rallied more than 3 percent.

Bullion was still below its Friday peak -- the highest since March 2014 at $1,358.20 an ounce -- when the shock vote caused gold prices to surge more than 8 percent as the metal is often perceived as a hedge against economic and financial risk.

Spot gold was up 0.45 percent at $1,318.01 an ounce, while U.S. gold settled up 0.7 percent at $1,326.90. Spot silver gained 3 percent to an 18-month high of $18.29.

"Although there are still big uncertainties ahead, looking at the way equities have performed over the past couple of days, a risk-on mentality is definitely coming back," Mitsubishi Corp Jonathan Butler said.

"In the medium term, gold is going to be supported by the unlikelihood that the Fed will raise rates in the next couple of months."

Global stock markets continued to recover after last week's hefty losses, while the dollar was down 0.48 percent against a basket of leading currencies.

"If Brexit is seen severely impacting the market, central banks will step in to calm the markets, which would not be good for gold," said Jiang Shu, chief analyst at Shandong Gold Group.

European leaders have asked Britain to act quickly to resolve the political and economic confusion unleashed by the so-called Brexit vote.

"People are really beginning to wake up to the reverberations of Brexit, not just the U.K. but Europe, the United States and the rest of the world," said Philip Diehl, president of U.S. Money Reserve.

"Brexit is like a 7 on the Richter scale. Is this the big shock or is this a foreshock of what's to come?"

Markets will continue to monitor U.S. economic data for clues on the timing of the next rise in U.S. interest rates.

"The uncertainty around Britain's vote has taken center stage and unless U.S. payrolls data comes up much higher than expected, I doubt it will change the Federal Reserve's timing of rate increases," Commerzbank analyst Carsten Fritsch said.

Low interest rates are positive for gold prices.

Platinum futures climbed 3.3 pct to its highest in three weeks at $1,012.50 and palladium futures rose 3.25 percent to $588.50, the highest since mid-May.