Gold and silver both spiked higher on Friday – global geopolitical uncertainty has investors expecting an extended period of loose central bank monetary polices and additional stimulus.
Gold for August delivery on the Comex division of the New York Mercantile Exchange was last up $17.60 or 1.3 percent at $1,338.30 per ounce. Trade has ranged from $1,323.10 to $1,340.90.
“The common argument we hear from gold participants is that gold is currently benefiting from a fear trade on Brexit, and that may indeed be the case,” Credit Suisse said, predicting that the metal will reach $1,500 early next year.
“But we think this recent fear trade leads to something more enduring as the surprise Brexit vote has solidified and intensified macro and political uncertainty and extended the time frame for a negative real rate environment in the US and potentially abroad,” it added.
Bank of England governor Mark Carney on Wednesday said that bank could lower interest rates to stabilise the economy following the Brexit referendum in the UK.
“It now seems plausible that uncertainty could remain elevated for some time,” Carney said. “The economic outlook has deteriorated and some monetary policy easing will likely be needed over the summer.”
Meanwhile, Comex silver continues its strong performance, climbing 67.7 cents or 3.61 percent to $19.30 per ounce – its highest price in nearly two years.
“We said recently that silver’s latest rebound has the potential to become a second up leg that drives prices to new highs for the year – this has happened,” FastMarkets head of research William Adams said.
“The UK leaving the EU may well cause contagion – it creates considerable uncertainty, which is likely to be bullish for gold and therefore silver. We are overall bullish for silver but we are wary of the potential for profit-taking,” he added.
As for the other precious metals, platinum for October delivery on the Nymex was up $22.90 at $1,047.20 per ounce while the most actively traded palladium contract was at $599.10, up $1.75.
In wider markets, the pound was near-unchanged at 1.3305 against the dollar while the FTSE 100 and Germany’s DAX were up 1.01 percent and 0.93 percent respectively.
In today’s data, the Caixin Chinese manufacturing PMI for June at 48.6 was below the forecast of 49.1 and May’s 49.2. This was the third monthly decline in a row and the steepest deterioration in manufacturing conditions since February. It was also the 16th straight month where the index was below the neutral 50 value.
China’s official manufacturing PMI for June at 50 was in line with expectations and down slightly from May’s 50.1. The country’s non-manufacturing PMI for May at 53.7 was up from May’s 53.7.
The official PMI is more focused on large state-owned firms while the independently surveyed Caixin PMI is closely watched for conditions in the country’s private sector.
(Editing by Mark Shaw)
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Source: Bullion Desk News
