Gold pushes back towards 2-year high, silver crosses $21/oz

By Jan Harvey

LONDON (Reuters) - Gold rose on Monday as political uncertainty following Britain's vote to leave the European Union supported prices after a burst of short-covering activity in China had pushed them back towards last week's two-year high.

The precious metal reached a peak of $1,357.60 an ounce overnight, less than $1 below last month's high, before easing back below $1,350 an ounce.

Silver also benefited from a surge of buying in China which at one point took it up more than 7 percent, breaking above $21 an ounce for the first time in two years. The metal has also benefited from strong technical signals.

Spot gold was up 0.7 percent at $1,351.76 an ounce at 1345 GMT, while U.S. gold futures for August delivery were up 1.2 percent at $1,355.30.

"The Brexit vote caused uncertainty and most people don't like that," Commerzbank analyst Carsten Fritsch told the Reuters Global Gold Forum on Monday. "Uncertainty leads to volatility in financial markets and to a rush into safe havens such as bonds and gold."

A post-Brexit recovery across European markets stalled on Monday with major share indexes mixed. [MKTS/GLOB]

Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Shares, rose 3.9 tonnes to 953.91 tonnes on Friday, the highest since July 2013. In the first half its holdings increased by 308 tonnes, its biggest half-yearly increase in seven years. [GOL/ETF]

The U.S. markets are closed on Monday for the Independence Day holiday.

Silver was up 4.1 percent at $20.52 an ounce. The metal has benefited from a perception that it offers good value compared to gold.

The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, fell to a two-year low on Monday, as silver extended gains after its biggest weekly rise in nearly three years.

The Shanghai Exchange Futures went limit up overnight as onshore players have aggressively been covering their short positions in the last few days, especially on Monday, one analyst with an international investment bank said.

"There is a little bit of a two-way battle going on in silver with a number of players going short in China," the analyst said. Hedge funds and money managers raised their bullish positions in COMEX gold and silver contracts to record highs in the week to June 28.

Platinum was up 0.4 percent at $1,063.75 an ounce, while palladium was up 1.5 percent at $613.30 an ounce.

(Additional reporting by Vijaykumar Vedala in Bengaluru, editing by William Hardy and David Evans)