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 following Britain's surprise vote to leave the European Union.
Bullion fell around one percent on Tuesday as investors booked profits after 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, the highest since March 2014.
Spot gold rose 0.4 percent to $1,317.50 an ounce by 1006 GMT, while U.S. gold was up 0.4 percent at $1,323.10.
"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."
European and Asian stock markets continued to recover after last week's hefty losses, while the dollar was down 0.2 percent against a basket of main 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," 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 its vote to exit the European Union, after the IMF said the uncertainty could pressure global economic growth.
Britain's vote to leave the bloc could pose a new drag on the U.S. economy at a time when momentum in the U.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 over the timing of the next Fed rate hike.
Low interest rates are positive for gold because the opportunity cost of holding it decreases as the dollar falls, making it cheaper.
Spot silver gained 2.6 percent to $18.20 per ounce and tread close to Friday's one-and-half-year high of $18.31.
Platinum climbed 1.6 pct to $990.90 an ounce and palladium rose 0.7 pct to $573.25.
Spot gold was at its highest relative to platinum on record this week as institutional and retail investors have piled into bullion following the shock referendum verdict.
(Additional reporting by Vijaykumar Vedala in Bengaluru; Editing by William Hardy)
