Gold Eases as Global Markets Stabilize on June 28
After reaching two-year price peaks following Britain’s vote to leave the European Union, gold prices started to ease after trading off the highs.
As the British pound fell to its lowest level in about 31 years in the past two trading days, the US dollar rose comparatively.
Britain’s finance minister said on June 27, 2016, that the British economy was strong enough to cope with the market volatility that has recently surfaced.
With a Brexit now a reality, the likelihood of a Fed rate hike in July is almost nil. In this scenario, gold could certainly take center stage.
Soros has been diving into gold again, which reiterates his bearish view on the economy and a dash toward safe-haven assets.
Since fund managers have huge piles of cash and the Brexit vote is in, some of their money might get allocated to safe-haven assets such as gold.
Central banks have been net buyers of gold since the beginning of the financial crisis of 2008. They’re using gold to diversify from currencies.
Market volatility often gives a positive kick to gold. The safe-haven appeal of precious metals grows when investors look for safety during volatile times.
With the Brexit vote in, central bankers around the world will try to follow loose monetary policies. It could also make it more difficult for the Fed to raise interest rates.
According to the median of 12 forecasts in a Bloomberg survey of analysts and traders, gold prices could reach as much as $1,424 per ounce by the end of the year.
The Brexit vote to leave the European Union came as a surprise, and the Markets had not priced it in, either in gold (GLD) or gold equities (GDX).
As gold rose after the Brexit decision, the correlation between gold and the dollar was positive rather than negative.
Though markets are down as a result of the Brexit decision, mining stocks have been spared.
Hedge fund managers boosted their bets on gold prices just two days ahead of the United Kingdom’s referendum.
Goldman Sachs has been infamously in the limelight this year regarding its recommendations on gold.
June 24 marked a dark day for the market as major economies felt the after-effects of the United Kingdom’s Brexit decision.
Overall market sentiment is adversely affected by the Brexit decision, and volatility has spiked.
In this series, we’ll cover the impact of the Brexit on precious metals and precious metal mining shares and funds.
Crude oil fell on Friday, June 24, amid the Brexit vote and dragged the prices of crude oil–related companies down.
While the Brexit has provided Randgold Resources with tailwinds in the form of higher gold prices and weaker currencies, it also remains operationally sound.