03/09/2019
Gold and Silver hits new Sterling record as Brexit showdown hits Westminster
The pound sunk below $1.20 this morning as Westminster prepares for a chaotic, and potentially historic, week for Brexit. Despite a slight recovery for the pound this afternoon, safe haven demand has stayed high, with an ounce of gold currently costing £1,281.04.
The drop in value against the US dollar saw the pound hit $1.19674 this morning – the lowest figure since 1985 (ignoring the 2016 flash crash). As a result, gold was boosted to a new Sterling record of £1,279.86 this morning, which was then beaten this afternoon.💷💷💷
Silver has also been making significant gains recently, increasing by 6.58% just this week, and 32.67% in the past three months. After following gold earlier, silver has made its own gains this afternoon, reaching £15.83 per ounce; reducing the gold-silver ratio to 81 from 93 just two months ago. 😲😲😲
The price of gold in GBP per ounce for the past 24 hours.
Brexit in the week ahead
The Prime Minister reaffirmed his intention yesterday to leave the EU on October 31st, with or without a deal, but MPs have requested an emergency debate this evening in the hope of removing Boris Johnson's ability to decide how the UK leaves the EU and when.
If today’s bill succeeds however (following a vote later tonight), then Downing Street has confirmed that they will call for a snap general election to be held on October 14th, claiming that the bill's success would make any future negotiation with the EU impossible.🤦🏻♂️
General election?
Odds for the result of a general election are as follows:
No overall majority - 4/5
Conservative win - 5/4
Labour win - 14/1
What next for gold and silver?
By Friday we could have virtually confirmed a no-deal Brexit, or initiated a general election to be held as soon as next month - either of which could see gold and silver climb higher.☝️☝️☝️☝️☝️☝️☝️☝️☝️☝️☝️☝️☝️☝️☝️☝️
If the UK leaves Europe without a deal, analysts are predicting the pound could drop to parity with the euro, and potentially even the US dollar. This could add between 10% - 20% to bullion prices, without even considering global factors which also look bullish for gold as priced in dollars.
Conversely, if a general election resulted in the UK definitely remaining in the EU, then the pound could quickly recover to 2016 values of around $1.40, bringing precious metal prices down in Sterling. For those already owning a significant amount of gold this could make now the time to realise some profits due the weakness of sterling..................
However the global outlook for gold priced in dollars is in our opinion still very positive, so even with UK remaining in the EU there could still be significantly higher prices to come.
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