The closing week of November featured some of the most dramatic changes to the gold price for months. In the space of two days, the price of gold went from a 10-day high to a near 5-month low, before starting to crawl back up once again. As confusion over Brexit negotiations continues to cause uncertainty in the British economy – is volatility the new normal for the gold price?
High hopes for Brexit, low outlook for gold
In what now seems a political eternity away, the closing days of November brought what investors saw as encouraging news that the British government and the EU had settled upon a divorce agreement. Following months of uncertainty about the future of the relationship between Britain and the EU, Sterling made encouraging progress against other currencies, signalling a renewed faith in the British economy.
Between the 28th and the 30th of November, the gold prices fell sharply, as this renewed faith in the British economy, compounded with developments in the American economy, weighed on gold’s appeal as a safe haven asset.
On the afternoon of the 28th, a troy ounce of gold traded at a 10-day high of £979.27. Two days later, on the 30th, that figure had fallen by almost 4 per cent to £940.38 – its lowest price since mid-July. Good news for Brexit, bad news for gold.
Brexit hopes slashed, gold price improves
In true Brexit form, barely days later everything had changed. By the 4th of December, hopes of securing a divorce deal had been delayed, by the last-minute intervention of the Democratic Unionist Party (DUP).
Sterling fell against further confusion, and gold’s safe-haven potential came back to the fore. Amidst further economic chaos, the price of gold began to rise once again, hitting highs of £953.99 on the 5th December, and continuing an upwards trend in the coming days.
What does this mean for your gold price?
While gold prices have been remarkably stable for the latter half of 2017, recent events show that gold’s potential as a safe haven currency isn’t going anywhere. Even as things finally look to be moving forward in the Brexit negotiations, global geopolitical tensions are still high and analysts have suggested that gold will continue to be a wise investment through 2018 and beyond.
If you want to find out more about investing in the contemporary gold market, then browse our current selection and buy gold here.
