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Gold Price Up Through 'Key' $1207 Level as 'Brexit Means UK Out of Single Market'
Tuesday, January 17, 2017 7:11
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Adrian Ash is head of research at BullionVault, the world-leading gold trading & ownership service online…
GOLD PRICES hit new 8-week highs at $1218 per ounce on Tuesday as world stock markets fell for a second day but the British Pound surged as UK prime minister Theresa May said Britain “cannot possibly” stay within the European single market when Brexit takes it out of the political European Union.
“Gold still in demand ahead of Brexit speech,” said a note from German financial services giant Commerzbank this morning, pointing to rising inflows to European trust funds backed by bullion.
New York’s giant SPDR Gold Trust (NYSEArca:GLD) saw its shares in issue grow on Friday – requiring more metal to back them – for the first time since Donald Trump won the US election in early November.
US investors would today return from the Martin Luther King Day holiday to find gold prices trading 1.3% above Friday’s finish in Dollar terms.
“Gold price…needs to clear $1207 for the current rebound to extend further,” said a new chart analysis from French investment bank and bullion market-maker Societe Generale on Monday, repeating a technical level advised to clients last week.
Having hit fresh 3-decade lows on Monday, the British Pound jumped over 3 cents to touch 7-session highs above $1.23 to the Dollar, and gained more than 2% from Sunday night’s 2-month low versus the Euro.
That squashed the gold price in Sterling back to £985 per ounce – some 2.1% beneath yesterday’s 10-week high – even as bullion rose against most other major currencies.
Ahead of May’s speech, betting against the Pound by speculative traders last week reached a 1-month high, according to positioning data collected by US regulator the CFTC.
Down by one-third from last July’s record ‘net short’ however, the overall bearish position amongst money managers was only 8% greater than the 2016 average.
May’s speech was followed by her Downing Street staff tweeting 12 points on Brexit, promising to “provide certainty wherever we can…strengthen[ing] the precious union between the 4 nations of the UK,” controlling immigration from the European Union but also guaranteeing the rights of EU citizens already here in exchange for protecting UK citizens living on the continent.
“I can hardly believe that the PM is now using the phrases and words that I’ve been mocked for using for years,” tweeted former UKIP leader Nigel Farage.
“Real progress.”
Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK’s leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – winner of the Queen’s Award for Enterprise Innovation, 2009 and now backed by the mining-sector’s World Gold Council research body – where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.
(c) BullionVault 2010
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