Daily Gold & Silver Market Report – 6/22/2016

Brandi Brundidge

6/22/2016 12:00:17 PM

EITHER OUTCOME FOR BREXIT IS FORECAST TO SUPPORT GOLD

Investors are eyeing Thursday’s vote for whether the U.K. will leave the European Union, better known as Brexit.  The outcome from such a dynamic move could be detrimental to the financial market, therefore investors are intrigued to what might occur.  "The markets have been responsive to changes in the polls, clearly, so the vote could certainly bring on significant volatility," Federal Reserve Governor Jay Powell told "Squawk Box" Wednesday. If the leave camp wins, "financial conditions could tighten. It could have an economic effect on the U.K. and the EU," Powell continued. "We would feel that, as well. We could very well feel that if there were a significant risk-off move."  Fed Chair Janet Yellen spoke before the House Financial Services Committee Tuesday, confirming if the U.S. requires further stimulus, negative interest rates would not be used.  

As Precious Metals remain flat Wednesday, analysts believe Gold’s volatility will help the yellow metal see a return whether Brexit occurs or not.  “We expect Gold to jump 10 percent in the event of a Brexit,” Societe Generale Head of Commodity Research Asia Pacific Mark Keenan said, forecasting a rally to $1,400 per ounce. “We expect volatility in Gold to increase significantly, and this can be played out in terms of, from an investor’s perspective, through accessing instruments like variance swaps,” which increase in value as volatility rises, he said.  If the U.K. stays with the EU and investors begin shifting their bets, Societe Generale expects “the re-positioning of investors holding long Brexit-related Gold positions will drive volatility higher.”

At 1:00 P.M. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,270.00 Down $2.10
• Silver, $17.38 Up $0.00
• Platinum, $983.30 Up $1.80
• Palladium, $562.50 Up $9.70

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