Gold surges for second day as investors seek Brexit havens

LAUNCESTON, Australia, June 27 Amid the horror for many, the elation for others and the shock for virtually everybody of the British vote to exit the European Union, perhaps the most measured and predictable response was from commodity markets. The metal then settled a little lower, at $1,322.

On Monday, AngloGold Ashanti (NYSE:AU), the world’s third largest gold producer in terms of output, added 4% for a market value of $8 billion on the NYSE.

Gold for August delivery on the Comex division of the New York Mercantile Exchange rose 0.93% to $1,224.65 a troy ounce. This enthusiasm is what is making Rogers wary.

Spot gold had risen 1.30 percent to Dollars 1,332.55 an ounce by 0055 GMT, after touching a high of USD 1,335.30 earlier in the day. As a safe haven asset, gold, yet again, is flying.

The price now edging towards the high of US$1,358.20 an ounce struck on Friday, something that at the time marked the highest level the precious metal had traded since March 2014.

Gold has also risen on the worldwide market reaching US$1,318 per ounce, the highest in two years.

Federal Reserve Chair Janet Yellen is due to speak at an ECB central bank conference in Portugal on Wednesday, with investors looking for indications on how Brexit will alter the outlook for the USA economy and the path of interest rates.

Britain plunged deeper into political crisis on Sunday after its vote last Thursday, leaving European Union and world officials confused about what to do next.

The Brexit decision stunned markets, and the turmoil seems to have set in.

Moody’s said the contagion-related uncertainty that Brexit had brought to the global economy would likely support ongoing demand for safe-haven asset classes, keeping gold prices high and the USA dollar strong relative to South African and Australian currencies. The bank increased its three, six and 12-month forecasts to $1,300, $1,280, and $1,250 an ounce from $1,200, $1,180 and $1,150, respectively, analysts including Jeffrey Currie and Max Layton wrote in a report received Monday. Gold is often perceived as a hedge against economic and financial risk.

While it’s easy to be caught up in every twist and turn of what is sure to go down in history as one of Britain’s most turbulent political periods, the trick is probably to ignore the media hype and concentrate on the bigger picture.