Gold Under £1000 For the First Time Since January .... not for long!
The prospect of no-deal coming off the negotiating table sent sterling on a rally gaining some 2.2% towards the end of February. The effect was gold prices plummeted below the £1000 per ounce mark, reaching a bottom of £978 which has spurred a buying frenzy here at Chards!
The “optimism” in markets has prompted many investors to sell off UK sovereign bonds at an 2 year record rate and this is even before anything Brexit related has even happened in reality! They might just regret this decision come the 29th March as any announcement less than ideal will send the pound plummeting once more. We have previously reported how volatile the pound is to any Brexit announcement even if the real-world effects are yet to manifest themselves.
Europe appears in some trouble with the Organisation for Economic Co-operation and Development (OECD) slashing growth forecasts and the ECB providing cheap government loans starting up the QE engine once again. Only a few months back the ECB announced they would taper the €2.6 trillion programme as economic outlook was positive.
How the price of gold can remain low given the recent OECD announcement and the revving of the QE engine is beyond me. Both of these point to a serious economic downturn. Too add to the economic woes China has reported a slowdown in exports and recently the US kept a dovish tone cancelling planned interest rate hikes signalling a less than ideal domestic economy. All this combined has investors looking for safe havens, bond markets have been rallying and like we said we have seen a buying frenzy at our showroom for gold and silver. I can only expect if the forecast doesn’t improve, markets continue to suffer the price of gold will likely reflect this and see some improvement.
You can read all of our Brexit commentary on our page “How Brexit Is Affecting Gold Price”
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