UK gold prices may be levelling-off after Brexit but a senior dealer at one of the oldest bullion houses in the UK is warning that demand for the yellow metal could still push prices up further this year.
Oliver Temple from City-based Gold Investments says following the country’s decision to leave the EU, prices for the yellow metal generally spiked as investors rushed to protect some of their assets by buying gold.
“With markets settling back down and a new British prime minister at the helm, gold prices are generally levelling-off,” says Temple.
Temple believes there could be a number of factors which are affecting the precious metal’s prices now.
“When interest rates are low, investors are attracted to the precious metal because of the poor returns on bonds and cash savings.
“The Bank of England Interest rates have remained on hold at 0.5% in July – economists and money markets now believe that in August the Bank will cut rates. Some Central Banks have been shoring up their own reserves,” says Temple. “In the past 12 months, China’s Central Bank’s gold reserves have increased by 71%. China’s own economic growth has slowed to 6.5% – this slowdown is making gold appealing for individuals and investment companies.”
Temple says the economic worries from the Eurozone are also still there and this will be having a bearing on the UK’s own economy.
“We do not know what the wider impact of Brexit will be in Europe despite Greece’s May deal on debt when further bailout loans to the country were agreed by Eurozone finance ministers.
“Bonds issued by the Italian, Spanish, and Portuguese governments are generating poor returns so this will also be making the yellow metal attractive.”
Temple says the dollar has become stronger recently so this will be having a bearing too on prices by keeping them down.
“Our advice for investors is to take a wider view of gold prices. Gold investing should be viewed for the medium to long-term, rather than just something for the short-term. It should be thought of like an insurance policy.
"We also advise investors to make sure they choose a reputable dealer, one that has been around for a long-time.”
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