The Impact of the Brexit Vote on Commodity Prices

The impact on oil prices was temporary...

(LONDON) - In the last week of June 2016, many investors, especially in the United Kingdom (UK), chose to sell off their assets that were previously invested in British stocks currency (Pound sterling), and reinvest in the commodity market, especially in gold, silver, and oil.

This was due to the uncertainty that was created as a result of the referendum held on 23rd June 2016 about the future of the UK in the European Union (EU), which resulted in the majority of voters choosing to leave the EU. The process of the UK leaving the EU can take several years and is commonly known as the "Brexit."

Commodity prices in the lead up and aftermath of the referendum

As a result of these polls, there was mainly optimism amongst economists, investors, bankers, and fund managers. However the market experienced a major shock as a result of investor panic after the results of the referendum became public, along with the news that the UK had voted to leave the EU. The investor panic impacted the prices of different commodities. Gold was the favourite commodity for investors to buy during this panic.

Gold

Over the next 10 days, the price of gold continued to rise, more moderately. On the 4th July 2016, the price of gold was USD 1349.20 per ounce.

Silver

Over the next 10 days, however, the price of silver rose significantly. On the 4th July 2016, the price of silver was USD 20.42 per ounce, a two-year high price for the metal.

Crude oil

Over the next 10 days the price of crude oil varied significantly. On the 4th July 2016, the price of crude oil was USD 48.94 per barrel. T

he actual impact of the Brexit vote on oil prices was temporary, and did not overshadow the natural fundamentals or fluctuations of the crude oil markets.

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