Money For Lunch – Brexit and the Effect on Gold Prices

Brexit and the Effect on Gold Prices

July 1, 2016 9:09 AMComments Off on Brexit and the Effect on Gold PricesViews: 27

Click here to get this post in PDF

The potential exit of Britain from the European Union has kept many people on tenterhooks for a while now. Most of it has been due to the economic implications of this political move. The vote has been finalized now, however, and Britain has made the decision to move away from the EU. As expected, the global market has been severely impacted by this vote.

Amid all of this financial upheaval, however, there has been a beacon. This, of course, has been in the form of gold. Once again, the value of that yellow metal has reached new heights – one of many in this year along. People are buying gold coins and bullion at an accelerated rate since the news about the Brexit broke.

Haven in a Crisis

Of course this precious metal is experiencing a performance similar to when most financial crises occur. This is because the yellow metal has been the harbor into which all investors move when currency begins to devalue. There is a great deal of uncertainty spilling over from Britain’s decision to leave the EU. People are not entirely sure what will follow next and how this will affect the global economy. Of course, many people predict that the markets will be negatively affected and that the British pound will suffer. Of course it is not just the British currency that will suffer but other currencies around the globe as well. This is a trend that has already been noted. It is these unfavorable views that are pushing people towards investing in the precious metal.

Counteracting Pound Performance

The Brexit has also already caused the value of the pound to sharply reduce. In fact, it is the lowest that it has ever been in the last thirty years. This too has led to the precious metal getting a sharp boost in return. As always, the depreciation of money has always caused people to invest in gold. It would seem that in 2016 this trend has not changed at all. On the 24th of June, a single ounce of the precious metal was selling for $1,315. In a single day, it had increased by more than four percent. This price could potentially increase, depending on how the British pound fares in the coming days.

Counteracting Political Uncertainty

Of course, these reasons are not the only ones that are responsible for the sudden spike in the precious metal’s prices. It is also fears of political consequences in the rest of the European nations. Many fear that Brexit is simply the beginning of a chain of events that will resound throughout Europe. Once again, this precious metal has been what people have turned to in times of political uncertainty. As people are unsure of how the other countries within the EU will react, they are turning to the yellow metal to counteract any unpleasant outcomes.

The next few days, weeks, and even months will be extremely important to the performance of gold in the market. While there is a great deal of speculation surrounding this commodity, only time will tell how it will truly fair.

Comments are closed