This Is How Brexit Uncertainty Will Drive Gold Prices
The British political system and the nation’s economy face unprecedented uncertainty, but you wouldn’t know it by looking at how calm markets are. Gold’s performance has been particularly slow and steady, as there is little safe-haven demand in the face of the ongoing Brexit ordeal.
Although gold prices continue to hold within striking distance of critical resistance at $1,300 an ounce, it hasn’t found enough momentum to push through that barrier – at least not yet.
Jasper Lawler, head of research at London Capital Group, offered an interesting explanation as to why gold isn’t seeing much safe-haven demand as a result of Brexit developments: “If investors are going to jump into gold, they are going to need to see the unexpected happen.” He believes that investors don’t see it as an impending crisis, even after the U.K. Parliament voted against the government’s proposed exit deal. In the U.S., many analysts have described Brexit as a sideshow for global markets. However, most investors are unprepared for the “unexpected”: a no-deal Brexit scenario.