On Friday the United Kingdom voted to leave the European Union and created havoc in equities and currencies. As investors "flee" equities in favor of "safe havens" like U.S. Treasuries and precious metals, the declines created the possibility of another wave of "liquidation" of risk assets such as equities.
World stocks tumbled and European bank shares were on track for their biggest ever two-day fall today as the political and economic fallout of Britain's shock vote to leave the European Union drove sterling to a fresh 31-year low against the dollar.
I think we can safely assume the Brexit vote is going to fail. This should be bullish for stocks and bearish for the dollar. A falling dollar should be good for gold. However, with stocks and crude oil moving higher, it’s likely to take some focus off gold.
The Cycle Projection Oscillator is indicating some potential near-term opportunities in several markets. Looking at a 240-minute chart of the E-mini S&P 500 shows potential weakness over the next couple of days as shown on the chart.
I see traders everywhere worrying about how the Brexit vote will effect gold. Folks, forget about the Brexit. By this time next week the Brexit will already be fading into memory and the market will go back to doing what it was doing before the vote.
Safe haven gold has been largely out of favor over the past few days after its recent rally ended abruptly on Thursday of last week, though a weaker U.S. dollar has helped to keep it afloat. Evidently, it has lost out in favor of riskier assets, such as equities and crude oil, which have stormed back to life, along with the British pound, after a new opinion poll from the UK suggested that the Remain camp’s support increased in the aftermath of the tragic death of a UK MP.