Gold down, but near four-week high ahead of Fed meet, Brexit vote

By Clara Denina

LONDON (Reuters) - Gold edged lower on Tuesday as the dollar rose, but worries about a potential British exit from the European Union and expectations the Federal Reserve won't raise rates at its June meeting kept it close to four-week highs.

Spot gold was down 0.4 percent at $1,278.56 an ounce by 1000 GMT, but has gained more than 5 percent this month, hitting a peak of $1,287 on Monday, its highest since May 16.

Gold priced in sterling was close to a near-three year high hit on Monday on mounting concerns over the prospect of a referendum next week pulling Britain out of the European Union.

"We are currently seeing the dollar appreciating because both the sterling and the euro are weakening on concerns Britain could leave the European Union," Natixis analyst Bernard Dahdah said.

"Investors are looking at gold and the dollar as a safe haven," Dahdah said, adding that expectation that the Fed is not going to raise rates in June will keep gold supported.

Bullion, which is often perceived as a hedge against economic and financial uncertainty, has been driven by rising investor risk aversion before key central bank meetings this week.

The Federal Reserve is expected to keep interest rates on hold for at least another month when it starts a two-day meeting later in the day.

Gold is sensitive to interest rates changes, with increases mostly signalling a rise in the opportunity cost of holding the non-interest yielding metal.

The Bank of England, Swiss National Bank and the Bank of Japan will meet this week, and are expected to hold monetary policies steady against a backdrop of caution about the global economic outlook.

Gold could get a further boost if a vote by Britain to leave the 28-member group, dubbed "Brexit," pushes Europe back into a recession.

Britain's "Out" campaign widened its lead over the "In" camp ahead of the referendum, according to two opinion polls published by ICM on Monday.

"The risk of Britain leaving has now increased substantially and the Fed will therefore signal its willingness in no uncertain terms to 'stay the course' (keep rates unchanged) in light of this potential 'Black Swan' event," INTL FCStone analyst Edward Meir said in a note.

In other news, the Hong Kong Exchanges and Clearing Ltd is aiming to launch its planned physically-delivered gold futures contract in September, its head said on Tuesday.

Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.27 percent to 896.30 tonnes on Monday, the highest since October 2013.

Spot silver fell 1.3 percent to $17.22 per ounce, after touching a one-month high of $17.45 on Monday.

Spot platinum was down 0.6 percent at $981.80, while palladium fell 0.4 percent to $537.75.

(Additional reporting by Koustav Samanta in Bengaluru; Editing by Alexandra Hudson)