Gold Slips Despite UK Gold Demand Surging – Investors “Seek Stability”

Gold fell again today despite very robust physical demand in western markets and especially the UK. Gold fell to a ten-day low as the recent global share rally showed signs of exhaustion.

Expectations that Britain could vote to leave the European Union in Thursday’s referendum have receded somewhat…but remain. Consequently, this is leading to very significant UK gold demand.

Over the last 5 days, we have had record demand from both Irish and UK retail and high net worth clients acquiring bullion in advance of the important poll. Other bullion dealers in the UK and indeed mints are reporting similar surging demand.

The Royal Mint has seen demand for gold “rocket” as investors seek sanctuary in safe haven gold due to increased volatility in stock and FOREX markets and concerns about the outlook for the UK economy and sterling (see News).

Two opinion polls yesterday showed the “Remain” camp had recovered some ground in the referendum debate…although a third poll found those wanting to leave were ahead by a whisker.

As ever, speculative money in the futures market appears to be dictating gold prices in the short-term. We expect the very robust physical demand will lead to a sharp bounce in gold prices in the medium-term. We are hearing of increasing illiquidity in the inter-bank gold market and will look at this in more detail tomorrow.

Gold And Silver News Headlines Emanating From The Brexit Saga:

UK gold bullion demand surges in run-up to EU referendum (Guardian)
Demand for gold rockets in UK as investors seek stability (Belfast Telegraph)
Gold slips ahead of Britain’s vote on EU membership (Reuters via CNBC)
Gold extends downturn, Yellen to address Congress (Bullion Desk)
Gold edges up on softer dollar; Brexit concerns ease further (Reuters)

It’s Francs, Gold If U.K. Goes and Euros, Sterling If It Stays (Bloomberg)
Investors Flee to Gold as Brexit Looms (Video) (Bloomberg)
UK Referendum: What you need to know about the EU (Professor Werner)
What Brexit Is All About: Taxation (and Regulation) Without Representation (Gold Seek)
Worst Yet to Come – Generational Chaos Ahead – Mauldin Economics