Loading ...The United Kingdom’s referendum on whether to stay in or leave the European Union has been big driver of currency and stock market volatility, but gold is also feeling the effects of uncertainty over the Brexit vote. And even as gold slides from its recent highs, two experts argue that it could rally no matter which way Thursday’s vote comes down.
“I think that gold works whether we get that Brexit and chaos ensues [in which case] gold goes higher — or if peace prevails on the ‘Bremain,’ the dollar eases, providing a bid into gold, commodities and high yield,” Rich Ross, head of technical analysis at Evercore ISI, said Wednesday on CNBC”s “Power Lunch.”
“Whether Britain ‘Brexits’ or ‘Bremains,’ gold should ‘brenefit,'” Ross quipped.
To understand his point, one must grasp two of the primary forces that impact gold prices: the US dollar, and uncertainty. As the dollar slips, gold tends to rise, so a post-vote rise in the British pound and euro should tend to hurt gold prices. On the other hand, rises in uncertainty and declines in stock prices tend to be greeted by gold gains, which is why a vote against the status quo could send gold soaring.
Another Britexit speculation on Gold that could benefit either way.
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