SINGAPORE – Gold dropped after posting the biggest two-day gain in more than seven years following the UK’s vote to exit from the European Union.

Bullion for immediate delivery lost as much as 0.8% to $1 313.62 an ounce and traded at $1 318.10 at 2:22 p.m. in Singapore, according to Bloomberg generic pricing. The metal surged 5.4% in the last two trading days, the most since January 2009.

Gold rallied to the highest level in more than two years on Friday after the shock of the Brexit vote led to a surge in demand for haven assets. Morgan Stanley joined banks increasing its bullion forecasts for 2016 and 2017, according to a report received on Tuesday that cited rising risks surrounding the Brexit issue as well the languishing cycle of US interest rate hikes.

“Those sorts of spikes tend to be followed by a form of retracement, and that’s what were seeing,” David Lennox, resource analyst at Fat Prophets, said from Sydney. “We’re not saying that the uncertainty and the safe-haven aspect of Britain pulling out of the EU is over yet. So there’s still going to be some potentially good upside for gold.”
Dollar Gains

The overnight gain in the dollar was also weighing on gold, according to Lennox. The Bloomberg Dollar Index, which tracks the currency against major peers, rallied 0.9% on Monday before falling 0.4% on Tuesday. Investor Jim Rogers said on Monday that US currency made a better haven than gold after the Brexit vote.

Asian stocks pared losses on Tuesday amid prospects for stimulus packages in Japan and South Korea. While gold prices dropped, oil and base metals rallied, with copper gaining as much as 1.7% in London.

Holdings in gold-backed exchange-traded funds rose 12.6 metric tons to 1 934.7 tons as of Monday, the highest level since September 2013, data compiled by Bloomberg show. There’s likely to be strong investor demand for bullion after the vote, according to Australia & New Zealand Banking Group Ltd.