Gold rates surged to its highest in the past three years, after the results of Brexit referendum. Bullion India experts evaluate ‘the Brexit effect on gold market’, to give the investors an idea of how the British exit from the European Union will affect gold rate in India over the coming months.
As U.K. voted to exit from the European Union there is an air of global uncertainties that is bound to raise the gold rates in the current calendar year. Historically, gold has always been the favourite commodity that investors seek in times of an economic crisis.
Hedging against gold will come into play as investors rushed to grab safer assets like gold over equities and other risky assets, creating an unruly demand for the rare and precious metal.
Experts believe that as dollar strengthens, the price of gold is likely to rise. The increased economic uncertainty due to the outcome of the Brexit vote may encourage more investors to pile on gold, which rose to $1,315 per ounce on the 24th of June, increasing almost 4.7% since the day before Brexit vote.
The Brexit effect on gold market may linger for months to come until the situation in EU becomes clearer. For those investing in the gold market India, it seems to be the right time and place to invest for prominent short term benefits.
Rise in Bullion Purchase.
Bullion India Experts predict a strong and continued influx into the gold market India, accelerated by the overwhelming uncertainty that investors are facing. The purchases of Bullions like gold coins by small investors have already seen a tremendous rise in the months near the vote on the Brexit referendum, and could accelerate further, in India and Globally.
Gold in its undying popularity is a superior and liquid asset. It has been known to provide investors with a hedge against the uncertainty in the market, mainly in the times of economic or political turmoil.
The future price of gold has been predicted to touch $1600 if the risk aversion in global markets makes it less probable for Federal Reserves to raise interest rates in the near future.
The difference in the price of gold in India due to conversion cost and fall of the local currency rupee over the surging dollar may impact the prices of gold further.
In India, the rise in gold rates may shy away buyers for a short duration, however, the buying trends have always remained undeterred when it comes to the people’s favourite yellow metal. Brexit effect on gold market has opened the floodgates to the purchase of gold, making the striking metal, seem more and more attractive by the day.