From Macquarie Bank:
Gold was one of the clear winners in the aftermath of the UK’s referendum on EU membership, which was won by the leave side. While some of the gains were just a knee-jerk reaction, the consequences of the vote are positive for gold, and we increase our near-term price forecast while maintaining our higher longer-term one. Industrial metals, which fell in price, will be affected by any weakening of global growth, but we think this will be offset by central bank easing.
Was this rally in gold justified? There are a number of arguments why the Brexit vote might be positive for gold: The sharp fall in sterling and uncertainty about British economic prospects will increase UK investor demand for gold: There are reports of increased purchases of bars and coins in the UK, but the numbers are too small to make a difference to the global market. One could extend the argument to the European public, on the grounds that the UK leaving will hit the rest of Europe, but here although the potential demand is larger the evidence of buying is scarce.
