By Clara Denina
LONDON (Reuters) - Gold rose on Wednesday as the dollar retreated and investor appetite for safe assets continued on longer-term financial uncertainty after Britain's surprise vote to leave the European Union.
Bullion fell by about 1 percent on Tuesday as investors took profits from its biggest two-day gain since November 2008 as the British vote sparked sales of riskier assets.
The metal, often perceived as a hedge against economic and financial risk, surged 4.8 percent on Friday to $1,358.20 an ounce, its highest since March 2014.
Spot gold rose 0.5 percent to $1,318.70 an ounce by 1147 GMT on Wednesday, while U.S. gold was up 0.3 percent at $1,321.60.
"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.
More From This Section
"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."
European and Asian stock markets continued to recover after last week's hefty losses, while the dollar was down 0.3 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, with the IMF having said the uncertainty could pressure global economic growth.
Britain's vote to leave the bloc could also drag on the U.S. economy at a time when momentum in the country's job market may already by slowing, Federal Reserve governor Jerome Powell said on Tuesday.
Markets will continue to monitor U.S. economic data for clues on the timing of the next rise in U.S. interest rates.
Low interest rates are positive for gold because the opportunity cost of holding it decreases while the dollar falls, making the metal cheaper.
Spot silver gained 2.5 percent to $18.17 an ounce and tread close to Friday's one-and-a-half-year high of $18.31.
Platinum climbed 1.2 pct to $988.75 and palladium rose 1 percent to $573.40.
Spot gold was at a record peak relative to platinum this week after institutional and retail investors piled into bullion following the referendum verdict.
(Additional reporting by Vijaykumar Vedala in Bengaluru; Editing by William Hardy and David Goodman)