Gold Price Up Through 'Key' $1207 Level as 'Brexit Means UK Out of Single Market'

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Gold prices hit new 8-week highs at $1218 per ounce on Tuesday as world stock markets fell for the second day but the British Pound surged as UK prime minister Theresa May said Britain "cannot possibly" stay within the European single market when Brexit takes it out of the political European Union.

That defied many analysts' expectations of a fresh shock to Sterling if May said Brexit means quitting the free-trade zone's existing treaties.

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"Gold still in demand ahead of Brexit speech," said a note from German financial services giant Commerzbank this morning, pointing to rising inflows to European trust funds backed by bullion.

New York's giant SPDR Gold Trust (NYSEArca:GLD) saw its shares in issue grow on Friday – requiring more metal to back them – for the first time since Donald Trump won the US election in early November.

US investors would today return from the Martin Luther King Day holiday to find gold prices trading 1.3% above Friday's finish in Dollar terms.

"Gold price...needs to clear $1207 for the current rebound to extend further," said a new chart analysis from French investment bank and bullion market-maker Societe Generale on Monday, repeating a technical level advised to clients last week.

Having hit fresh 3-decade lows on Monday, the British Pound jumped over 3 cents to touch 7-session highs above $1.23 to the Dollar and gained more than 2% from Sunday night's 2-month low versus the Euro.

That squashed the gold price in Sterling back to £985 per ounce – some 2.1% beneath yesterday's 10-week high – even as bullion rose against most other major currencies.

Chart of gold price in British Pounds Sterling. Source: BullionVault

Ahead of May's speech, betting against the Pound by speculative traders last week reached a 1-month high, according to positioning data collected by US regulator the CFTC.

Down by one-third from last July's record 'net short' however, the overall bearish position amongst money managers was only 8% greater than the 2016 average.

May's speech was followed by her Downing Street staff tweeting 12 points on Brexit, promising to "provide certainty wherever we can...strengthen[ing] the precious union between the 4 nations of the UK," controlling immigration from the European Union but also guaranteeing the rights of EU citizens already here in exchange for protecting UK citizens living on the continent.

The United Nations estimates that 1.2 million British citizens live in other EU states, compared with perhaps 3.3m immigrants to the UK from those countries.

"I can hardly believe that the PM is now using the phrases and words that I've been mocked for using for years," tweeted former UKIP leader Nigel Farage.

"Real progress."

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