FXTM information and reviews
OctaFX information and reviews
XM information and reviews
FXCC information and reviews
Libertex information and reviews
FxPro information and reviews

What is the Impact of Brexit on the Prices of Gold and Silver?

7 April 2021

With the UK leaving the European Union, questions regarding Brexit’s impact on metal prices increased. Market experts and analysts were concerned with such questions as:Will metal prices go up or down in 2020/2021? How will the metal industry be affected by Brexit?The metal industry has suffered greatly by the uncertainty caused due to delays during the Brexit negotiations. UK metal traders reported a major decline in the metal prices of up to 50%. This was a result of reduced consumer demand. However, there is potential for the value of metals to improve during 2021 especially due to the increased certainty following the Brexit deal. Many experts support that there will always be a demand for metals in the UK.

How did Brexit influence the Gold and Silver Market?

As already stated, many analysts argued that gold and silver prices will soar because of Brexit. This was mainly due to the fact that investors would have taken their money from the stock exchange in their effort to find a safe-haven asset. For instance, when the EUR/USD declined, many investors turned to real money such as gold and silver.

As James Butterfill, head of research and investment strategy at ETF Securities, stated before Brexit: “Brexit would be very beneficial for shorting sterling and we will probably see a big pick up in gold. In that scenario we think gold could hit $1,400 [an ounce]”.There are three potential reasons for this:

The metal market usually responds positively when there are expectations that the FED would follow through on their rate hike promises, as history shows repeated patterns of gold and silver price climbing along with interest rates. Even a small rise in interest rates will negatively impact metals’ trading.

Advantages of the Metal Market

All this uncertainty can be utilised by traders to their advantage by investing in gold and silver every time that the FED Chairwoman Janet Yellen talks about raising interest rates. People should not fall for this trick though and panic about their positions as they can go ahead and buy their metals or shares at a better price.Gold price is expected to rise to $1,500 while silver to $20 irrespective of political uncertainties such as Brexit or the FED raising rates.

However, failure to do the latter will result in gold rising above $1,600 and silver above $27 by the end of the year.It is also expected that over the next months, the gains in gold and silver will be very high, while quality mining stocks will be where the real money is made.

The past has shown that mining stocks have provided leverage 4 times more than the underlying move of the metals. Some mining stocks are up 200% or more. For instance, silver stock pick is up 270%. After such a big move, many investors are hesitant to buy although mining stocks are bouncing off drastically.Overall, it seems that whether post-Brexit realities will have a long-term impact on UK metals remains to be seen. In order to avoid any risks and fill in the gaps, traders may already be focusing their efforts on alternative, emerging markets outside of the EU.




The Euro rebounded from the low
The Euro rebounded from the low

After updating its multi-year lows again, the major currency pair rebounded. The current quote for the instrument is 0.9656. Last night, the local interest in risks improved a bit, helping the asset to successfully correct...

29 Sep 2022

Gold Shows Signs of Life, But Heads Towards Another Losing Month
Gold Shows Signs of Life, But Heads Towards Another Losing Month

The precious metal is largely considered as a hedge to inflation, but it has not confirmed this status during the current year. It did kick it off with a rally, but as the Fed begun hiking rates back...

28 Sep 2022

Forex and Cryptocurrencies Forecast for September 26-30, 2022
Forex and Cryptocurrencies Forecast for September 26-30, 2022

Last week, all the attention of the markets was focused on the FOMC meeting of the US Federal Reserve, which took place on September 21. The probability of another rate hike by 75 basis points (bp)...

26 Sep 2022

Trading the SPDR S&P 500 ETF Trust
Trading the SPDR S&P 500 ETF Trust

The Standard & Poor’s (S&P) 500 Index measures the market capitalisation of the top 500 US largest corporations. Many traders and investors use the S&P 500 Index as a benchmark...

23 Sep 2022

Gold pauses as traders await Fed decision
Gold pauses as traders await Fed decision

The anticlimactic performance of gold continues as the prospect of aggressive rate hikes by central banks around the world amid heightened inflationary pressures...

21 Sep 2022

Developing a forex trading plan: All you need to know
Developing a forex trading plan: All you need to know

All forex traders have different backgrounds, market views, risk appetite, thought processes and expectations. Therefore, traders should not just blindly follow what other traders do...

20 Sep 2022

Editors' Picks

HFM information and reviews
IronFX information and reviews
FXCM information and reviews
NordFX information and reviews
Vantage information and reviews
FP Markets information and reviews
FP Markets

© 2006-2022 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.