By Jan Harvey
LONDON (Reuters) - Gold fell 1 percent on Tuesday as buyers cashed in gains from the metal's biggest two-day rally since late 2008, made in the wake of Britain's shock vote to quit the European Union last week.
The metal jumped to its highest in more than two years at $1,358.20 an ounce on Friday after the referendum on EU membership, and to more than three-year highs in euro and sterling terms. It quickly retreated from that peak, however.
Spot gold was down 0.9 percent at $1,311.93 an ounce at 0930 GMT, while U.S. gold futures for August delivery were down $9.20 an ounce at $1,315.50.
Losses in the wider markets reversed on Tuesday, with European shares up 2.3 percent after a three-day fall on hopes of a more co-ordinated central bank response to financial market losses.
"Equities are showing some signs of stabilisation, and gold is really a mirror image of what the equity markets are doing," Julius Baer analyst Carsten Menke said. "But clearly there is a lot of uncertainty in the market so I would not expect gold to move quickly below $1,300."
"If we have news that there is stress in the financial system, which might make people think we are moving into a Lehman-like moment, that could trigger higher gold prices. But as long as we do not see these indicators of systemic stress, gold should stay rather rangebound at these higher levels."
Among currencies, sterling lifted from 31-year lows against the dollar, while the euro climbed half a percent versus the U.S. currency.
Investors also sought out lower-rated euro zone bonds on Tuesday, venturing from the safety of German benchmarks as they bet on action from the European Central Bank to shore up the bloc after Britain's vote to leave the European Union.
"Once the immediate short-run rush to safety subsides and assuming effective policy responses to allay capital market concerns, we think gold will struggle to stay above $1,300 an ounce during Q3, and will push back down towards $1,250 an ounce," Standard Chartered said in a note.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, climbed another 13 tonnes on Monday to 947.38 tonnes, the highest since July 2013.
Among other precious metals, spot silver was down 0.3 pct at $17.67 an ounce, platinum was 0.5 pct higher at $976.86 an ounce and palladium was up 1.1 pct at $559.
(Additional reporting by Vijaykumar Vedala in Bengaluru)
