A vote to leave the EU tomorrow would likely see some volatility in global markets, increasing the demand for ‘safe haven’ gold.
Spot gold last traded softer at US$1266 an ounce.
A vote to remain would have the opposite, more stabilising effect and could see the price of gold fall, although Marex Spectron weren’t convinced that was the case.
"I think there is a lot more room on the upside [for gold] should there be a leave vote, rather than the downside on a remain vote,” it said in a note today.
If the former, gold has the potential to rally as far as 1350 in the medium term I would think. If the latter, then [we] really don’t see prices dropping much more than 20-25 dollars as a quick knee jerk reaction.”
Naeem Aslam, chief market analyst at ThinkForex echoed those comments that gold stands to gain more than it can lose from tomorrow’s vote.
“Brexit is still the biggest threat. Markets are already celebrating a premature victory [for Remain] and that is a major concern,” Aslam said.
“A remain vote is highly priced into gold now. The Leave vote is the one we have to watch out for because that is not priced in.”
Gold prices ended the U.S. day session slightly lower Wednesday and notched a two-week low overnight. Some profit taking and position evening were featured. This week’s better risk appetite in the marketplace has been a negative for safe-haven gold. However, with Thursday’s Brexit vote looming, look for sellers in the gold market to become scarce until at least Friday morning. August Comex gold was last down $1.60 an ounce at $1,270.90. July Comex silver was last down $0.009 at $17.31 an ounce.
Technically, August gold futures prices closed nearer the session high today. The gold bulls still have the overall near-term technical advantage but are fading. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,300.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,250.00. First resistance is seen at $1,275.00 and then at $1,280.00. First support is seen at today’s low of $1,263.80 and then at $1,250.00. Wyckoff’s Market Rating: 7.0
Reference: Proactive Investors, Kitco
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