The gold price has dipped from last weeks peak above $1,313 as fears of a Brexit have eased, but British investors continue to pile into the yellow metal for safety because Thursdays outcome remains highly uncertain.
Gold bullion demand surges in run-up to EU referendum, reported Londons Guardian newspaper, while a Belfast Telegraph headline read, Demand for gold rockets as investors seek stability.
Since June, the United Kingdoms Royal Mint has seen its online transactions rise 32% over Mays, while revenue exploded by almost 150%.
Possible turbulence, mint says: Overall since early 2016, demand for precious metals has risen, particularly with gold, mint official Chris Howard said. While we are uncertain at this stage on what impact the results of both the European referendum vote and the US elections will have on the gold market, with the Royal Mints trading platform and our significant gold holding, we are prepared for possible market turbulence.
The mints signature gold Sovereign coin has been one of its top sellers, Howard noted.
Gold investors stuffing safes: Meanwhile, citing Google search data, Londons Telegraph reported that worriedsavers are buying gold bars and stuffing them in safes at home, data suggests, as fears mount that a Brexit-induced financial meltdown could be just around the corner.
According to the Telegraph, the frequency of searches for the phrase home safe is reflecting crisis levels unseen since November 2008.
Meanwhile, Switzerland reports that the United Kingdom has been the biggest destination for Swiss gold exports this year, averaging over 60 mt/month since February, compared with average exports of less than 2 mt/month in 2015, the Platts news agency noted, citing growing investment demand.
As of Wednesday, the outcome of the Brexit vote to leave the European Union remains too close to call. An Opinium poll found the Leave camp leading slightly at 45% versus 44% for the Remain faction, with the rest undecided.
Negative rates bigger than Brexit: Gold skeptics think that the metals price could take a hit if the Brexit movement fails, but at least some analysts say bullion can benefit either way.
I think gold is a buy here, David Davitt of Harvest Volatility Management told CNBC on Tuesday. As we move toward these negative rates, you put dollars in a vault, theyre going to start destroying each other. Theres a possibility if you invest dollars that youll get less dollars back in a years time. So the lack of yield on gold had long been an argument, but if negative yield is throughout the economy, then gold synthetically has a positive yield.
And Rich Ross of Evercore ISI agreed, saying that whether Britain Brexits or Bremains, gold should brenefit. Ross noted that golds 20% gain this year largely occurred in the first six weeks of the year, only to be relatively rangebound since then, so Brexit wont take away that early-year advance. I think that gold works whether we get that Brexit and chaos ensues gold goes higher or if peace prevails on the Bremain, the dollar eases, providing a bid into gold and commodities, high yield, etc. So I like it either way.
Bill Baruch of iiTrader also concurred with the win-win scenario for gold, predicting in a Bloomberg interview, Golds going to be a lot higher after a Brexit. And if they vote to stay, the dollar will weaken and gold will hold ground, he said. Over the longer run, I do expect gold to be testing $1,400 by the end of August. I think theres a lot of value in this area near-term and into the long term.
Although the gold price might lose ground after a potential Remain vote victory, the metal has strong support well above $1,200. Therefore, a Brexit failure could provide gold investors with a key strategic buying opportunity.