Following weak US jobs data, the chances of a Fed rate rise this week have dropped to zero.

Gold had been under pressure in recent weeks, falling back to around $1200/oz as a run of positive data heightened the chances of a rate rise.

“While we still expect the Fed to raise rates twice this year, the market is increasingly discounting this possibility,” ANZ said.

Japan and Europe are also continuing monetary easing programs.

Rising inflation, particularly as the oil price recovers, should also support investor demand for gold.

Gold ETFs are rising after two years of declines.

“At its current pace, it is highly likely that 2016 can become the biggest year for ETF inflows – surpassing 2009 levels,” ANZ said.

ANZ said weak physical demand from China and India remained the biggest headwind for gold.

But it said “Brexit”, the potential British exit from the EU, represented a “watershed” moment for gold.

Britain will go to the polls next week to vote in a referendum on the issue.

“With market attention diverting away from the Fed, the impact of the referendum on the gold market is likely to be much greater,” ANZ said.

“Opinion polls remain divided, with both remain and leave camps ahead at various times.

“What is clear though is that the price of insuring against a collapse in the pound has hit a seven year high.”

According to ANZ, if the Brexit goes ahead, the pound is likely to collapse and increased volatility would drive investors to safe haven assets like gold.

“This could provide a massive boost to investor demand and would likely push gold towards $1400/oz,” it said.

Gold has not traded above $1400/oz since September 2013.