Gold price to highest level since 2014

Gold prices rose to their highest level since August 2014 on Thursday, after the Federal Reserve Announced that interest rates will remain low for a long time to come. The U.S. central bank tempered expectations of a possible interest rate hike, while inflation continues to rise.

The Gold price In dollars, it shot up 1.4% to $1,310 per troy ounce, while silver gained 1.4% and now yields $17.73 per troy ounce. This keeps intact the upward trend, which was interrupted by a small dip a month ago. The Federal Reserve tried to prepare the markets for an interest rate hike, but now that it has been put on the back burner, gold is picking up the upward movement again.

Flight to safe havens

Gold and silver are also benefiting from the uncertainty surrounding Brexit, Britain's possible departure from the European Union. The referendum will not be held until June 23, but investors are already preparing for safe havens such as precious metals and government bonds. Germany can borrow for the first time for 10 years at a negative interest rate this week, while Switzerland can even raise money for 30 years without paying interest.

Gold and silver

The rising prices of gold and silver are accompanied by an influx of speculative money. Investors are expanding their position in so-called exchange-traded funds, which are investment funds that issue shares and hold gold or silver as collateral.

The total stock of gold ETFs rose this week to its highest level since October 2013. The total position in silver is even at the highest level ever at 20,227 tonnes, according to figures from Bloomberg.

Brexit hangs over the market

According to several analysts and traders polled by Bloomberg, the price of the precious metal could rise further to $1,350 per troy ounce in the event of a Brexit. But if the majority of the British population chooses to stay within the EU, a price drop towards $1,250 per troy ounce is also possible. British savers who are concerned about the value of the British pound are increasingly deciding to buy gold. The price of gold in this currency has already risen by more than 30% since the beginning of this year. Silver is at a similar rate of return. 

Gold price to highest level since August 2014