Gold price drops below £1,000 as Pound strengthens
Michael Pinson, News Editor
27 Feb 2019, 11:48 a.m.
The price of gold has dropped below £1,000 per ounce in the past 24 hours as the Pound climbed to a stronger position against both the US Dollar and the Euro, fuelled by fresh investor confidence following Theresa May’s concessions yesterday over a possible Brexit delay.
The news that MPs will be able to vote against any ‘no-deal’ scenario has settled some fears about the impact that Brexit could have on the economy. Leaving with a deal, holding a second referendum, or the cancellation of Brexit are seen as better prospects for the economy by investors.
Following this news the Pound made gains against both the US Dollar at $1.32 - a five-month high - and the Euro at €1.16 – a two year high. Although the price of gold took a hit on the back of this it should be noted that gold is still up 6.84% over the past six months.
Brexit news - whether good or bad - has had immediate impact on the price of gold and the strength of the Pound Sterling within recent months. A similar drop in gold price was seen in March 2018 following the announcement that a Brexit deal had been agreed in principal.
The confidence in a Brexit deal saw the Pound rise and gold fall to £932 per ounce. In July, the Pound slumped as David Davis and Boris Johnson resigned from Theresa May's cabinet. A month later and the Pound was at an 11-month low over no-deal fears, but it continued on a rollercoaster ride - up following positive talks with Michel Barnier, down as talks broke down and the same back and forth until November and December as the meaningful vote approached.
Almost one year later a Brexit deal is still not agreed, and Brexit could be delayed. With changes occurring almost daily as the deadline nears it is uncertain where the Pound, and the price of gold, could be heading.