The Potential Impact on Gold Prices of the UK's Brexit Transition in 2020 Revealed by Daniel Fisher of Physical Gold

Physical Gold Limited is an online dealer of gold and silver based in London. Managed by Daniel Fisher the business keeps a close eye on aspects of the UK and the global economy as it directly impacts their precious metals business. Daniel previously wrote an article about "The Impact of Brexit on Gold Prices, UK Politics and the Economy" back in November 2019.

Since then though a lot has changed. The UK parliament voted to leave the EU on 20th December 2019 when MP's voted to leave the UK by a majority of 124. The UK subsequently left the EU on 31st January 2020 and is now in a transition period before it leaves the EU permanently on 31st December 2020.

We interviewed Daniel to discuss the potential implications on gold prices (and the wider economy) of this transition period. We initially asked Dan about the UK's decision to leave the EU and enter the transition period. Daniel said, "Brexit was a huge step for the UK (and also has implications for the EU too). Leaving the EU is a significant milestone in the history of the UK both economically and politically."

We asked Daniel to discuss how the transition period is likely to impact gold prices throughout 2020. Daniel commented, "Markets generally hate uncertainty, at the least the decision to leave creates certainty (for a period). It's likely for most of 2020 that Brexit will cause minimal impact on gold prices. Nobody truly knows of course, but I expect that most of 2020 gold prices won't be affected too much by Brexit apart from occasional sporadic volatility due to negotiation headlines and blips in the process. In fact, Brexit is likely to have a backseat in its impact on gold prices when compared to other economic factors such as the coronavirus outbreak, global terrorism and the US elections, etc."

Boris Johnson has until 31st December to secure a trade deal with the EU (with many observers saying this is impossible). If a deal can't be agreed, then "no-deal" will become a default. We asked Daniel what we can expect in the last couple of months leading up to the exit date (1st November to 31st December 2020). Daniel said "It's in the last couple of months of the transition period that we are likely to see the most volatility in gold prices. The markets hate uncertainty and markets will become more volatile if the outlook of a trade deal is uncertain. The most volatile scenario is if a no-deal looks likely between the EU and the UK. In this case, investors are likely to switch to precious metals as a great safeguard against market instability and economic uncertainty."

Of course, from 1st January 2021, the UK will have left the EU. We asked Daniel "So, what impact will the departure be likely to have in 2021 and beyond?" Daniel replied, "As I said if there is a no-deal then we can expect volatility, which could continue for year potentially, nobody truly knows. In the event that an amicable trade deal is agreed then if anything there is a good possibility that the gold price will weaken slightly as any "uncertainty" built into the current gold price due to Brexit can be removed".

The outlook for gold prices in 2020

In general, the outlook for gold in 2020 remains positive. Only yesterday the global gold price reached a 7-year high, this was mainly due to coronavirus concerns. It's interesting to note that the price of gold directly reacts to events of economic uncertainty. The more unforeseen economic events which arise in 2020 then the more likely it is that investors will flock to gold as they have done for thousands of years. Gold has for millennia been used as a safe haven investment to protect the owner against the economic turmoil of the day. How much Brexit impacts the gold price remains to be seen, it will certainly be interesting to watch from the sidelines.

About Physical Gold Limited

Physical Gold Limited is an online-based gold and silver dealer operating from London, UK. Daniel Fisher founded the company in 2008 and has developed a reputation for providing sought after top-quality precious metals at value for money prices. BNTA registered, Physical Gold Limited has grown from strength to strength and enjoys a good position in the UK market.

Contact details

Company website: https://www.physicalgold.com
Registered Office: 25 Old Broad St, London EC2N 1HN
Telephone: UK +44 (0)020 7060 9992
Contact: Daniel Fisher, Managing Director
Organisation: Physical Gold Ltd

Image Credits: Marco Verch