The Brexit winners are gold and silver
Gold climbed for a fifth week and silver surged to the highest price since September 2014 on Friday.
|||Singapore - Gold climbed for a fifth week and silver surged to the highest price since September 2014 as investors speculated that central banks will need to continue supporting the global economy in the wake of Britain’s vote to quit the European Union.
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Gold added 0.8 percent to $1,332.62 an ounce at 3.20pm in Singapore, according to Bloomberg generic pricing, as the metal in the UK currency rallied back above 1,000 pounds an ounce. Silver jumped as much as 3.6 percent to $19.396 an ounce and traded at $19.2405. Prices have soared 8.4 percent this week, the most in nearly three years.
Haven assets are in demand on expectations that policy makers will do more to support growth. Governor Mark Carney said on Thursday the Bank Of England could cut interest rates within months as it tries to shield the UK economy. Prospects for further US rate increases have been wound back since the Brexit vote, while investors continue to pile into exchange-traded funds backed by gold, boosting the assets to the highest since 2013.
“There are risks that policy makers will now have to consider further easing to help limit the fallout from Brexit,” Zhan Dapeng, an analyst at Everbright Futures, said in a note. “Gold could climb further as more investors allocate money into it.”
Assets in gold-backed ETFs have increased 34 percent to 1,952.5 metric tons this year as of Thursday, data compiled by Bloomberg show. Gold will probably extend gains as chances of a Fed hike have “decreased tremendously”, said Ivan Szpakowski, who left Citigroup Inc. earlier this year to set up hedge fund Academia Capital.
Traders see just a 9 percent chance of higher US rates by year-end following the Brexit vote, which came less than two weeks after policy makers at their June meeting held rates steady and pared forecasts for future increases.
Bullion of 99.99 percent purity rose 1.7 percent to 286.37 yuan a gram ($1,338.47) on the Shanghai Gold Exchange. Platinum advanced 0.6 percent, while palladium lost 0.4 percent.
BLOOMBERG