After a disastrous night for Labour the gold price fell almost £13 per ounce this morning as markets reacted to the Conservatives edging closer to an overall majority in the General Election. The drop in the gold price was due to the a dramatic strengthening of the pound as pre-election fears of a hung parliament were quashed.
As early exit polls were announced yesterday evening the pound soared as much as 2.5% against the euro international investors rushed back into the UK as it became apparent a coalition would not be required. The FTSE 100 also jumped 2% over the 7,000 mark as the City welcomed the election result.
Whilst the outcome has created political stability and a fairly optimistic short-term economic outlook the focus now turns to Cameron's promise of an EU referendum. Forming a key part of the Tory pre-election campaign, the prospect of a referendum on the nations membership in the European Union has somewhat clouded sterlings post-election surge. A 'Brexit' would de-stabilise the economy and cost the country around £215 billion or 14% of GDP depending on the UK's ability to re-negotiate EU trade deals.