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Gold, Silver Spike as Brexit Fallout Continues

June 24, 2016 at 17:43 by Andrew Moran

Gold and silver are soaring on Friday after Britons astonishingly voted in favor to Leave the European Union (EU) in Thursday’s historic referendum. The precious metals experienced gains as investors flocked to the safe haven assets amid turmoil in stock markets all over the world. Investors usually dive into gold when there is global economic or political uncertainty.

Gold prices skyrocketed as high as $71 before paring some of its gains. August gold futures climbed $55.09, 4.37%, to $1,316.29 per ounce at 17:15 GMT. The yellow metal is poised to finish at its highest level in nearly two years. It is continuing its strong 2016 as gold is up 17.94%, or $191.80, this year.

This is a vastly different scenario than earlier in the week. Gold prices reached a two-week low on Wednesday as investors were confident of a Remain result. This week’s polls had suggested that the Remain side had the greatest amount of momentum ahead of the June 23 vote.

July silver futures also jumped $0.37, or 2.14%, at $17.72 an ounce. Silver will finish Friday’s trading session at its highest settlement since the end of April. The metal is continuing its rise in 2016 as silver is up 21.50%, or $3.07, this year.

The Brexit has also eliminated the chance of a Federal Reserve interest rate hike in July. According to the CME Group FedWatch tool, there is a 4.8% probability of a rate hike next month. This is good news for gold since investors dump the yellow metal in a rising interest rate environment because dollar-denominated metals do not pay interest.

During her semiannual monetary policy testimony in front of Congress on Tuesday, Fed Chair Janet Yellen, who did not pick a side in the Brexit debate, warned of “consequences” to US markets and the nation’s economic outlook.

If you have any questions and comments on the commodities today, use the form below to reply.

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