Gold rallied to more than $1300 an ounce as early polls showed more than 50% Britons favoring Britain’s exit from the European Union. The extreme volatility and uncertainty in the financial markets has caused gold rally because of an increased demand for safe heaven investment.
As of this writing, the precious metal is being traded near $1300 an ounce. A hurdle may be noted around $1304, the horizontal resistance area ahead of $1315, the swing high of the latest major upside rally and then $1350, the psychological number.
On the downside, the yellow metal is likely to find a support around $1282, the horizontal support level ahead of $1250, the psychological number and then $1200, the confluence of a psychological number as well as the swing low of the latest major downside move as demonstrated in the above daily chart.
A series of early referendum results favoring the U.K.’s departure from the European Union battered the British pound Thursday night and into Friday morning, rallied gold and pushed down stock markets in Asia, confounding traders and investors who had stacked up bets on the Remain camp. Then the counting started. A hair’s-breadth win for Remain in Newcastle, in the northeast of England, started to deflate the pound, as did reports of Leave victories in smaller districts. Sunderland, a Labour-leaning port city where anger at the EU runs high, reported a 61.3% Leave tally. The pound slammed down, falling more than 3% in minutes. Gold is expected to touch $1400 levels if Britain leaves the EU.
Considering the overall fundamental outlook, buying the precious metal on dips appears to be a good strategy in short to medium term.