UK vote for split pushes gold past 32,000 per 10g

Ahmedabad: Britain's exit from the European Union (EU) triggered a sharp rally in domestic gold prices which crossed the Rs 32,000 mark on Friday. This is the highest price in two-years, a rise of more than Rs 1,000 per 10g was seen in the city bullion market, ending at Rs 32,053. Silver also surged by more than Rs 1,500 to end at Rs 43,003 a kg.
The Brexit referendum result, that Britain will be leaving the EU, led global markets to collapse and sent investors racing for safe-haven assets.
"The surge in prices was sudden due to speculation after the referendum results came in. This time, a sharp fall in the rupee against the dollar and pound affected gold prices across the market," said Haresh Soni, former president of the All India Gems and Jewellery Foundation (GJF).
Soni further said that the further impact on prices will depend on the technicalities of the separation of the UK from EU.
"Gold and silver prices have soared and may reach as high as Rs 36,000 per 10g. Investors will pull money from stock markets and banks, seeking safe-haven assets instead like gold investments. If the Euro plummets, they will also look to get out of cash and into real money such as gold and silver. Gold is seen as a haven for cash," said Saurabh Gadgil, said vice president, Indian Bullion and Jewellers association (IBJA).
G V Sreedhar, chairman of GJF said: "Gold is always a safe commodity to buy. It is the right time for NRIs to come to India for jewellery-related investments. The gems and jewellery sector has been facing several challenges for the last few months but has still remained resilient."
Industry insiders said that any adverse impact on prices could be partly cushioned by upcoming domestic impulses to growth such as a good monsoon and a likely easing of policies (both monetary and fiscal). Despite the surge in prices, jewellers and bullion traders believe a good monsoon will lead to an increase in demand.
Sreedhar added, "Jewellers will see good demand. Good monsoons will also boost consumer sentiment and will support the increasing sale of jewellery this season."
Globally, gold soared as much as 8% to its highest levels in more than two years on Friday.