Brexit Gold Rush

Precious Metals
Gold Investing

Gold and gold equities are flying high in the wake of the Brexit. Analysts are now expecting gold to break $1,400 per ounce.

Gold prices were still sitting well above $1,300 per ounce Friday morning in the wake of the Brexit on Thursday. Prices were as high as $1.339.20 per ounce after Brits votedĀ 51.7 to 48.3 percent to leave the European Union.
As of 12:52 p.m. EST on Friday, prices for the yellow metal were sitting at $1,316.20 per ounce. ā€œGold is living up to its reputation as a safe haven,ā€ stated Commerzbank in a note to clients, stating that goldā€™s recent gains constitute the steepest daily percentage increase since the global financial crisis in 2008.
Investors also piled into gold mining stocks. Both the Market Vectors Gold Miners ETF (NYSEARCA:GDX) and the Market Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ) spiked on Friday morning, with both up a healthy 6 percent as of 12:59 p.m. EST.


A number of analysts are forecasting that goldā€™s positive momentum will continue. Rob Chang, managing director and head of metals and mining,Ā Canada, at Cantor Fitzgerald, stated that gold may test the $1,400 level in the near future as the flight to save haven assets continues. ā€œSince Brexit has serious ramifications that will be felt over time for the EU, we do not expect this to be a short-term move as the risk-off trade will be very popular,ā€ he wrote.
Similarly, Commerxbank expects uncertainty in the political arena to lend support to gold over the next few months. ā€œEven though the situation is likely to calm down gradually following the first reaction, the ā€œBrexitā€ issue is bound to preoccupy the markets for some time to come,ā€ the firm stated. ā€œAfter all, people are already asking which EU member state will be next to hold an exit referendum.ā€
For its part, UBS had previously highlighted $1,300 as a ā€œmake or break level,ā€ and sees gold moving higher still after Thursdayā€™s surge. ā€œA break of $1300 represents a bullish trend continuation breakout and suggests a next target at $1380 to 1483,ā€ it stated.
Gold equities are expected to continue their positive performance as well. ā€œIn the mining world we expect precious metals names to have great strength. Especially producer and near term producers,ā€ Chang stated. ā€œThose in our coverage list best positioned to capitalize are Primero Mining (NYSE:PPP), Avino Silver & Gold Mines (NYSE:ASM), and Premier Gold (TSX:PG). Near term producer Pershing Gold (NASDAQ:PGLC) will also have tailwinds.ā€
Major players in the gold space saw their share prices rise on Friday; Goldcorp (TSX:G) was up 6.14 percent to $23.83, while Barrick Gold (TSX:ABX) was up 7.41 percent to $26.52.
Junior gold mining stocks that saw a boost in share price included:
  • Orex Minerals (TSXV:REX); up 9.33 percent to $0.82 per share
  • Brixton Metals (TSXV:BBB); up 7.14 percent to $0.75 per share
  • Pure Gold Mining (TSXV:PGM); up 7.69 percent to $0.70 per share

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Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Brixton Metals is a client of the Investing News Network. This article is not paid for content.
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