Gold Price Sinks Most in Month on Signs U.K. Turning Away From Brexit
London (Jun 20) Gold tumbled by the most in almost a month as polls that showed voters tilting toward remaining in the European Union cut demand for haven investments.
Bullion for immediate delivery lost as much as 1.4 percent to $1,280.47 an ounce, the biggest intraday drop since May 24, and traded at $1,284.03 by 10:56 a.m. in London, according to Bloomberg generic pricing.
Gold has been highly correlated with expectations of the outcome of a U.K. referendum on EU membership, with a greater probability of the U.K. staying in the union negative for the metal. This perception was strengthened last week when U.S. Federal Reserve Chair Janet Yellen said the vote was factored into a decision to keep rates unchanged.
“The recent surge in support for the ‘Remain’ camp may have an influence on U.S. monetary policy, with a win likely to give the Fed greater scope to increase rates sooner rather than later,” said Matthew Turner, a precious metals analyst at Macquarie Group Ltd. in London. “The polls are volatile, so it seems brave to move this early, but I suppose fortune favors the brave in these situations.”
A poll from Survation for the Mail on Sunday showed 45 percent backed “Remain,” while 42 percent supported “Leave.” Campaigning was temporarily suspended last week after pro-EU British lawmaker Jo Cox was killed. The man charged with her murder declared “death to traitors, freedom for Britain" when asked to give his name during his first court appearance Saturday. The poll was conducted after Cox’s death.
The pound rallied on Monday, gaining as much as 2.2 percent against the dollar, the biggest intraday move since March 2015.
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In the run-up to the vote, investors have added to holdings in gold-backed exchange-traded funds, while hedge funds are holding the second-biggest bet ever that the metal will rally further. As of Friday, the assets in ETFs rose 0.4 percent to 1,895.13 metric tons, the highest since October 2013.
In the week ended June 14, money managers boosted their net-long positions in gold futures and options 29 percent to 240,862 contracts, according to U.S. Commodity Futures Trading Commission data. The all-time high was 253,653 reached in August 2011. Comex trading volumes were above average on Monday, with 70 percent more contracts traded than the 100-day average for the time of day.
In other precious metals:
•Silver traded 0.6 percent lower at $17.392 an ounce. Exchange-traded holdings declined for the first time in 15 sessions on Friday, falling 152.3 tons to 20,079.9 tons, the biggest absolute decline since December 2014, according to data compiled by Bloomberg.
•Platinum for immediate delivery advanced 0.6 percent to $976.04 an ounce.
•Palladium is up 1.4 percent at $541.97 an oz.
Source: Bloomberg
