The World Gold Council (WGC) released a market update in light of the EU referendum result, where it addressed the gold price surge and provided analysis of the current climate.
On June 24 2016, the gold price surged to $1,313.85/oz (£983.56), up 6% from the day before.
With Britain voting to exit the European Union, the WGC expects to see strong and sustained inflows into the gold market, driven by the level of uncertainty that investors now face.
On Friday, the WGC reported that the sterling was trading at a 31-year low, and world equity markets had plummeted. “The Bank of England has said that it stands ready to take whatever action is necessary, a mantra that is likely to be repeated by other central banks. In practice, this could mean interest rates move further into negative territory in parts of the world, another positive for gold. Central bank action has already capped the gain in other safe haven assets, with the Swiss National Bank intervening early this morning,” the report stated.
The report continued that it was “difficult to find an event to compare this to,” and that “while trading blocs have broken down before, none have been as sizeable and important to the global economy as Europe.”
The organisation reported that gold is “fulfilling its classic role as a safe haven asset and performing exactly as the many investors that bought it in the run up to the referendum will have hoped.” It expects to see strong and sustained inflows into the gold market driven by the uncertainty that faces the global markets.