By The Gold Report
Gold’s post-Brexit vote surge continues unabated, with Bloomberg reporting today that the price of the safe haven commodity has risen for six consecutive days.
UBS speculates that the commodity could reach $1,400/ounce “in the short term,” with prices averaging $1,340 in the second half of this year, according to Bloomberg. The price per ounce reached its highest point since March 2014 today (July 6) at $1,374/ounce before retreating below $1,370/ounce.
Gold may be in “the early stages of a bull run,” Joni Teves, a UBS analyst, told Bloomberg.
The story and an accompanying interview with Robin Tsui of State Street Gloval Advisors state that investors are flooding into both physical gold and gold ETFs. Silver is also running up, and has topped $20/ounce. Tsui foresees the trend will continue for the “foreseeable future.”
These days strategic investors, rather than retail investors, are driving the market, Tsui said. These investors believe gold “has started or resumed its important role as a strategic asset in portfolios.”
There is no bubble in precious metals plays, according to Tsui. He also noted that only 1% of investors hold gold, but if that were to increase to 2% or 5%, upside to the gold price would be “substantial and significant.”
Factors affecting the price run of precious metals commodities include Britain’s historic vote to leave the European Union and yesterday’s decision by the Bank of England to ease capital requirements for banks. As reported by the BBC, financial risks anticipated to follow the Brexit vote “have begun to crystallise. The current outlook for UK financial stability is challenging.” The vote also has eroded prospects for a U.S. interest-rate increase this year.”
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