Following Britain’s decision to vote for leaving the European Union the prices of Gold have witnessed a surge globally. The precious metal is currently trading at a two-year high in Qatar. Prices of Gold have shot up by as much as 27 percent since January 2016 of which 7 percent increase was registered in the past two weeks after the Brexit referendum.
In Qatar, the prices have jumped from QR145 to QR154 per gram of 22 carat gold following the vote. Similarly, 1 gram of 24 carat rose from QR152.50 to QR161.50.
Nevertheless, the sudden surge in gold prices has not affected demand for Gold as many would expect it to mainly due to the festive season of Eid. Demand for Gold usually increases by 30-50% during the Eid seasons as compared to normal business season. Although, buying gold this festive season will prove to be a costly affair in comparison to past years the demand has actually increased by an estimated 30%.
The Brexit vote due to its unexpected nature rattled financial markets around the globe. Panicked investors withdrew money from shares and invested them in assets that are deemed stable such as Govt. bonds and gold. This abrupt influx of money into gold pushed the prices up around the world.
In Qatar the 22-carat gold commanded a better demand than its 24-carat counterpart as many Asian expats purchased gold due to the perception of prices being low around Eid time.
Gold prices are expected to remain high as uncertainties in the UK continue to make US dollar stronger and in turn push gold prices up.