Gold eased more than 1 per cent on Monday, extending its slide from a near two-year peak hit last week, as polls ahead of a referendum showed Britain could opt to remain in the European Union.
Advertisement
Concerns over a possible Brexit lingered after a series of recent polls showed that voters remained evenly split ahead of Thursday’s vote.
“We had a few days at the beginning of last week when the odds of a “Leave” vote were getting higher than a “Remain” vote, which prompted a sharp rally”, Capital Economics analyst Simona Gambarini said.
“In the event of Brexit, we expect gold to move 10% higher and volatility to increase significantly”, analysts including Robin Bhar at Societe Generale SA said in a report.
Spot gold fell as much as 1.5% to a low of $1,269.51 an ounce and was down 1.3% at $1,273.76 by 1.10pm GMT. USA gold also dropped 1.4 percent to $1,274.60. “If anything, wider markets seem to be too confident in a “remain” victory (which) could clear the way for the Federal Reserve to raise rates sooner rather than later. a negative outcome for gold”, Turner said, adding that a vote to leave would instead strengthen the dollar and limit any gold rally.
Polls out over the weekend showed those likely to vote in of leaving the United Kingdom has lost some of the its momentum, with several surveys now putting the “remain” camp in the lead.
As the world watches the June 23rd vote, we watch to see if gold prices will drop, or swing even higher in the coming months.
Bookmakers’ odds have shown those wishing to stay in the European Union ahead and Betfair put the implied probability of a vote to “Remain” at 72 per cent on Monday, up from 60-67 per cent on Friday. “The uncertainty over the outcome of the vote should lend support to gold”.
“That said, the referendum will doubtless be the dominant theme this week”.
Hedge funds and money managers took their bullish stance in gold to the highest in almost five years in the week to June 14, USA government data had showed on Friday.
Advertisement
Among other precious metals, silver fell 1.1 percent to $17.28 an ounce, platinum was down 0.6 percent at $975.74 an ounce and palladium dropped 0.7 percent to $541.50 an ounce. Bullion fell 0.7 percent on Monday, touching a low of $1,277.34.
