By Clara Denina
LONDON (Reuters) - Gold rose on Wednesday, recovering from its lowest in nearly two weeks, as prospects for further economic stimulus helped to bolster investor appetite whil the dollar remained flat.
Accommodative monetary policies favour gold as well as equities because low interest rates encourage investors to opt for assets that do not rely on interest yields.
Spot gold was up 0.7 percent at $1,340.90 an ounce by 1417 GMT, having earlier touched $1,327.30, its lowest since July 1. Bullion had fallen by 1.7 percent on Tuesday, its biggest one-day drop since May 24.
U.S. gold rose 0.5 percent to $1,341.50.
"Gold prices can continue to benefit from an uncertain economic picture for the UK and Europe after the Brexit vote and also from any quantitative easing, which also means low interest rates," Natixis analyst Bernard Dahdah said.
Gold has gained about $100 an ounce since Britain voted to leave the European Union, with worried investors piling their cash into safe-haven assets.
Global shares came within reach of testing their 2016 peak on Wednesday, also bolstered by prospects of economic stimulus. [MKTS/GLOB]
The dollar, in which gold is priced, fell 0.2 percent against a basket of six currencies.
After five weeks of gains, gold had come under some pressure following strong U.S. non-farm payrolls data on Friday.
Despite better than expected jobs data, the Federal Reserve should be in no rush to raise interest rates, two senior Fed officials said.
"Gold thrives in an environment of negative rates, low government bond yields ...obviously the unknown is the probability of a Fed rate increase, which could however no happen this year, helping the metal's price ascent," Societe Generale analyst Robin Bhar said.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 1.63 percent to 965.22 tonnes on Tuesday, its biggest one-day decline since Dec. 2. [GOL/]
Palladium touched an eight-month high of $645 an ounce.
Platinum, which fell for the first time in two weeks in the previous session, rebounded 0.1 percent to $1,087.50.
Silver, meanwhile, gained 0.7 percent to $20.27.
(Additional reporting By Nallur Sethuraman and Vijaykumar Vedala in Bengaluru; Editing by David Goodman and William Hardy)
