After the exit of the UK from the EU, market continues to worry about possible negative consequence of this event, and the price of gold continues to rise.
Last Friday, gold prices soared up to the two-year highs, and at the closing session in SOMEKH, August futures for gold rose by 4.7%, up to the level of 1322.00 USD per ounce, showing the largest one-day increase since September 2013. Investors’ demand for gold continues to increase.
Hedge funds and other speculative investors keep net long position on gold at the multi-year highs; since the opening of today’s trading session, spot price of gold has been at level of 1315.00 USD per ounce.
Some economists believe that the price of gold can go up to $1375 from $1300 per ounce. The results of the UK referendum added uncertainty about the prospects of world economy, and it seems that the US Fed is not going to rush to raise US interest rates. US Fed Governor, Mr. Jerome Powell said on Wednesday that the UK decision to leave the EU has increased risks to the fragile global economy, he also indicated that the US Fed is going to adhere to soft monetary policy.
Today at 19:30 (GMT+2), Fed President of St. Louis, Mr. James Bullard, will give a speech. It is expected that he will also indicate a tendency of the Bank to continue soft policy
This fact should have a positive impact on the American stock markets and on the price of gold, as usually in the periods of low interest rates and market turbulence demand for gold increases. It is difficult for gold to compete with the lucrative assets in the time when interest rates are high, as gold does not bring interest rate.
Yesterday, at the closing session at the Comex August futures for gold rose by 0.7% to 1326.90 USD per Troy ounce.
Gold price is still above the level of 1300.00 and the demand for gold will continue in the short term. Some market participants expect that the price of gold can go up to $1400 per ounce by the end of this year.
Short positions on gold will be advisable when the market calms down after the European events and the US Fed will be prepared to tighten monetary policy.