Gold Spot Price Open: $1,263
Gold Spot Price Close: $1,319
Change in Gold Spot Price: +$56
Silver Spot Price Open: $17.38
Silver Spot Price Close: $17.72
Change in Silver Spot Price: +$0.34
Precious metals made massive gains on Friday to close out what was an otherwise poor week of trading. When all was said and done, gold ended up gaining more than 50 dollars while silver improved by more than 30 cents. Platinum and palladium finished the day mixed, with platinum picking up more than 20 dollars while palladium moved downward by about the same margin.
Stock Markets in Shock After BRExit
The global marketplace was thrown into a state of shock on Friday when it became known that the citizens of the UK voted to leave the European Union. This vote came as such a surprise because for the better part of the past week or more the overwhelming majority of global investors were under the impression that the UK was going to remain. The UK referendum was anything but a landslide, as just over 51% of the vote was in favor of a UK exit.
Not only are stock markets in the US and elsewhere around the world in freefall, the referendum result also ended up having an effect on US interest rate hikes. A statement from TD Securities summed things up by saying, “We believe that ‘Brexit’ is a macro shock to the global economy and the ramifications to the U.S. are unambiguously negative. We expect the Fed to take the tightening in financial conditions into account and that should push the trajectory of hikes further out.” This provides a bigger boost for gold and silver because as interest rate hikes are delayed, investors flock to safe-haven assets such as precious metals.
As far as what the UK’s exit means for the future of the global economy, that is not so easy to say. One thing people are slowly but surely beginning to believe is that this move marks the end of the European Union as we know it. While it is unclear what the future holds for the global economy, we do know that this uncertainty is playing right into the hands of the precious metals bulls.
High Anxiety to Continue Supporting Metals
At the present moment in time, the level of anxiety we are seeing across the global marketplace is nothing like we have witnessed in recent history. As such, I would not be surprised to see gold and silver continue to gain value thanks to the increasing level of uncertainty facing investors. What’s more, with people worrying about the future of the EU as an organization, there is going to be a lot of focus brought to the possibility of other countries leaving the EU.
What’s more, another factor that is playing into metals’ favor is the fact that interest rates are not likely to be hiked at any point in the near future. Prior to the UK decision, it was looking like August would be the earliest date where we might see interest rate hikes. Now, there are people who would be surprised if we even saw one more rate hike during 2016.
Being that this happened towards the end of the week, it will truly be interesting to see what the global marketplace looks like come Monday.
Wrap-Up
This was a very interesting week mostly thanks to the fact that the entire world was expecting one thing, and in the end the entirely opposite thing occurred. As we look ahead to the last week of June, it will truly be interesting to see how markets end up. Right now, all the momentum in the world is in favor of precious metals, and it will be intriguing to see just how far spot values can climb…if they can climb higher at all.
