Wednesday, 29 June 2016 04:27

Gold price boosted by UK vote to leave EU

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On June 23, 2016 citizens of the United Kingdom voted in a referendum to leave the European Union. As the news of this historic vote spread, the worldwide reaction and political fallout was swift. British Prime Minister Cameron resigned, followed by several members of Parliament. The EU called an emergency meeting for the remaining 27 members to discuss procedures going forward. Scotland, whose citizens prefer EU membership, hinted at a new vote on independence from the UK. US Secretary of State Kerry headed for meetings in Europe and the UK in an effort to promote calm. Central Bankers, scheduled to meet this week in Portugal, will likely discuss policy adjustments aimed at maintaining orderly markets.

The financial reaction was also swift and continues to develop. The British Pound and the Euro both dropped, and the Yen and US Dollar acting as safe haven currencies both rose. Stocks worldwide fell and bonds rose, driving yields lower. Precious metals led by gold soared. On June 24, gold rose £106 or 12.4% and $50, or 4%. In morning trading in Europe on June 27, gold was up an additional €40 (4%) to £999 and $10 to $1325 as the value of the pound continued to drop vs the dollar. As uncertainty and volatility are likely to continue gold priced in dollars, which traditionally decreases when the dollar rises, may still rise as buyers seek safety.

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Mitchell Battino

A professional numismatist with over thirty years of experience, Mitchell A. Battino is a certified appraiser and numismatic consultant who specializes in buying, selling, and appraising U.S. and world gold and silver coins. Mr. Battino is a regular contributor to numismatic publications, attends major coins shows, and travels extensivley to purchase deals and collections.

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