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Brexit Timeline: Impact on Gold Prices (2016 - 2019)

Brexit Timeline: Impact on Gold Prices (2016 - 2019)

Brexit. Brexit. Brexit. That's all we've been hearing, reading and talking about for so long. But now, as the government has gained another extension until the 31st October, we thought it would be interesting to see just how this whole process has affected gold prices since the referendum result 3 years ago.

We hope you'll find this rollercoaster-of-a-timeline valuable. Gold is often used as a safeguard investment in times of uncertainty so this should give you an insight into how the markets reacted to the news as it unfolded. We'll go into a bit about each event, list other important events around that time and show you how this news had an effect on gold prices. 

 

Key Brexit dates that affected gold prices:

  1. Referendum results (23rd June 2016)
  2. Article 50 triggered (29th March 2017)
  3. First round of negotiations begin (19th June 2017)
  4. Second round of negotiations complete (20th July 2017)
  5. Third round of negotiations begin (28th August 2017)
  6. Establishing UK's Brexit position in Florence (22nd September 2017)
  7. New Secretary of State for Exiting the European Union (9th July 2018)
  8. UK Government Brexit White Paper released at Chequers (12th July 2018)
  9. No deal preparations begin (23rd August 2018)
  10. Withdrawal agreement is published (14th November 2018)
  11. MPs begin Brexit debates (4th December 2018)
  12. Theresa May returns to Brussels (11th December 2018)
  13. Withdrawal deal is rejected in House of Commons (15th January 2019)
  14. Withdrawal deal 'Plan B' presented (21st January 2019)
  15. Withdrawal deal 'Plan B' rejected (12th March 2019)
  16. Extension of Article 50 to 14th April 2019 (21st March 2019)
  17. Withdrawal deal rejected for third time (29th March 2019)
  18. Further extension requested to October 2019 (11th April 2019)

 

Photo of the front of 1oz Gold UK The Royal Arms 2019 Coin

 

Below is our Brexit timeline and how it has impacted gold prices from 2016 - 2019:

 

1. The Referendum result

 

23rd June 2016

Let's go back to the beginning. The result of the United Kingdom European Union Referendum of 2016 was a victory for the 'Leave' campaign, amassing a total of 51.9% of the vote. The referendum was first put to a public vote because Prime Minister David Cameron had rejected calls for a referendum on his country’s continued membership of the E.U. in 2012, but announced less than a year later that his Conservative government would hold one if re-elected in 2015. After losing the 'Remain' campaign, David Cameron resigned. It was down to his successor, Theresa May, to pick up the torch of responsibility and lead the negotiation process.

 

Gold prices

This unexpected result sent shockwaves through the markets. All polls and predicted that remain would win. Gold prices shot up from £851.27 on the Thursday to £999.13 the following Monday. Investors who bet on the outcome of the referendum would have profited nicely from this considerable price jump. 

 

Other key events likely to affect markets during this time

The Eurozone released data on private sector business activity, the U.S. released data on initial jobless claims and new home sales, and IFO Institute reported on German business climate.

 

The Referendum result's impact on Gold Prices Chart (GPB)

 

 

2. Article 50 triggered

 

29th March 2017

Nine months after the referendum, Prime Minister Theresa May triggered the official mechanism that made Article 50 of the Lisbon Treaty a reality. A letter was signed triggering the process before May made a statement of unity to the country. She also addresses the House of Commons to explain her Brexit process to the House.

 

Gold prices

Investors knew that this was the first stage of the leaving process, so markets didn't react unexpectedly and supported a general bullish upward trend. Gold prices stalled around this time however, slightly dipping down from £999.55 to £998.90.

 

Other key events likely to affect markets during this time

The UK published data on net lending, Germany and Spain released preliminary data on inflation and the U.S. released a report on pending homes sales. 

Triggering of article 50's impact on Gold Prices Chart (GPB)

 

 

3. First round of negotiations begin 

 

19th June 2017

David Davis, the UK's Secretary of State for Exiting the European Union, arrived in Brussels to begin talks with Michel Barnier, the Chief Negotiator appointed by the European Commission. The lead negotiators, pose for the cameras before several hours of initial discussions. David Davis struck an upbeat tone, insisting that the recent terrorist attacks and fires in Europe showed how the continent could still come together in moments of crisis. 

 

Gold prices

Markets remained uncertain at this point, but gold was already in a downward trend. Many suggested that the UK led with a weaker negotiation attitude which made the Pound Sterling drop around this time. Markets responded and rushed to safeguard, pushing gold slightly higher from £977.64 to £983.22.

 

Other key events likely to affect markets during this time

New York Fed President William Dudley and Chicago Fed President Charles Evans made public appearances, with Fed Vice Chair Stanley Fischer, Boston Fed President Eric Rosengren and Dallas Fed President Rob Kaplan delivering comments from the federal reserve. 

 

How first round of negotiations impacted Gold Prices Chart (GPB)

 

 

4. Second round of negotiations complete 

 

20th July 2017

After the second round of negotiations, and although on a somewhat of a positive note, David Davis's speech didn't fill investors and business-owners with much hope that the talks had been particularly constructive, and was vague about what had been arranged. During the second round of negotiations, issues such as citizens' rights, the financial settlement and the border between Ireland the Northern Ireland, as well as other separation issues, such as Euratom, EU external agreements and dispute resolution, would have been agreed. But there was little evidence of an agreement on any of these issues, and the UK was asked for more clarification on the next round of talks.

 

Gold prices

This aloofness in rhetoric was felt. Gold was in an upward trend anyway, so this news supported gold prices and saw them increase slightly higher from £954.34 to £960.33 during this time. 

 

Other key events likely to affect markets during this time

The UK reported its retail sales, Australia released an employment report and private sector data on business confidence, The Bank of Japan announces a new interest rate, The ECB announced its latest monetary policy decision and President Mario Drahi holds a press conference.

 

How second round of negotiations impacted Gold Prices Chart (GPB)

 

 

5. Third round of negotiations begin 

 

28th August 2017

This round of talks discussed future relations, an EU-UK trade agreement, and transitional arrangements. Again, EU comments from Michel Barnier didn't help market sentiment, who urged that the UK started “negotiating seriously”. 

These comments threw the talks into doubt. At this point, European leaders agreed unanimously that the UK must make sufficient progress on three separation issues before talks could progress to trade. Barnier’s mandate meant that the UK had to reach an agreement on the financial settlement, the Irish border and EU citizens’ rights and a future relationship with the EU. The rhetoric used this time, told investors that there had been progression in the third round of talks on a number of fronts, but it still wasn't enough to reach solid conclusions.

 

Gold prices

Barnier's comments, and again a lack of information for business owners and investors, meant that markets responded by pushing gold prices up sharply from £1,002 to £1,019.63.

 

Other key events likely to affect markets during this time

Financial markets in the UK closed for holidays during this time, the U.S. reported on consumer confidence, and Canada released data on raw materials price inflation.

 

How third round of negotiations impacted Gold Prices Chart (GPB)

 

 

6. Establishing UK's Brexit position in Florence 

 

22nd September 2017

Theresa May needed to bolster morale for negotiations and did so by delivering a speech on Brexit in Florence. She gave clarity in some areas, but none in many others, and did just enough to unblock the stalled Brexit talks. The EU27 wanted promises on money and the other key article 50 points: citizens’ rights and the Irish border, detail on the transition period, and a feasible vision of what Britain wants its future trading relationship to look like. Her speech was polite, non-committal and relayed the government’s wish for a deep and special partnership with the EU once the UK leaves.

 

Gold prices

As gold prices were on a massive downward trend, this speech did just enough to give investors hope. Gold prices leveled out at this news and saw a tiny decline from £957.48 to £957.20.

 

Other key events likely to affect markets during this time

U.S. lawmakers arranged a tax-cut budget deal to prevent a government shutdown and North Korea unveils the testing of a hydrogen bomb over the Pacific Ocean.

 

How Theresa May's Florence speech impacted Gold Prices Chart (GPB)

 

 

7. New Secretary of State for Exiting the European Union 

 

9th July 2018

David Davis delivered a heavy blow to negotiations by resigning as Brexit secretary, warning that he would fight any move by the prime minister to make further concessions to Brussels. He told the BBC that he was no longer the best person to deliver the PM's Brexit plan and claimed that Mrs. May had sold out to Brussels with her new 'soft Brexit' strategy saying, "we have given too much away, too easily." Dominic Raab, a Brexiteer who was previously a minister for housing and planning in the Home Office, was appointed as his replacement. Mr. Raab campaigned for Leave during the referendum, so his approach was welcomed in restoring trust to negotiations. 

 

Gold prices

Gold was already in a big downward trend at this point. News of Mr. Davis's departure gave an interesting insight into the negotiation procedure and assisted the gold prices in dipping a little further from £947.63 to £946.03.

 

Other key events likely to affect markets during this time

Bank of England Deputy Governor Ben Broadbent spoke at an event in London and European Central Bank President Mario Draghi gave a testimony about the economy, monetary policy, and virtual currencies before the European Parliament in Brussels.

 

How getting a new Secretary of State for Exiting the European Union impacted Gold Prices Chart (GPB)

 

 

8. UK Government Brexit White Paper released

 

12th July 2018

Following on from the notorious Conservative 'Chequers' meeting, the UK government published its long-awaited Brexit White Paper. The document was 104 pages long and set out a proposal for the UK's preferred way forward in negotiations with the EU. The white paper document set out the UK’s plan with five key objectives; the economy, communities, the union, democracy and the UK's place in the world. This was met with a mixed reaction. Tory Brexiteer Jacob Rees-Mogg said it was a "bad deal for Britain", and further conservative resignations followed from Ben Bradley, Boris Johnson, Maria Caulfield and Steve Baker.

 

Gold prices

Gold was already in a big downward decline at this point. This news further supported prices being pushed down further, trending down from £942.13 to £936.92 during that time.

 

Other key events likely to affect markets during this time

The ECB published minutes of its latest monetary policy meeting, Canada reported on new house price inflation and the U.S released data on consumer price inflation and jobless claims.

 

How release of the White Paper impacted Gold Prices Chart (GPB)

 

9. No-deal preparations begin

 

23rd August 2018

It's argued that within negotiations, all options should available at all times. Mr. Raab needed to fortify this position and establish negotiating power by mentioning preparations for a 'no-deal' Brexit. To some politicians, a no-deal option was unnacceptable. To some other politicians, the deal being offered was unacceptable. The media released further no-deal preparation stories of Britain stockpiling resources in preparation for this. 

 

Gold prices

Indicators of a hard Brexit gave the markets some turbulence and drove investors to safeguard their investments. The gold prices jumped up during this time, rising from £925.15 to £929.75.

 

Other key events likely to affect markets during this time

ECB President Mario Draghi spoke at an event in Germany, the Eurozone released data on manufacturing and service sector activity, Dallas Fed President Robert Kaplan spoke publically and the U.S released data on new home sales.

 

How No Deal preparations impacted Gold Prices Chart (GPB)

 

 

10. The withdrawal agreement is published

 

14th November 2018

The Brexit withdrawal agreement was published on the 14th of November and was, again, met with hostility. The outline agreement was published after the text was agreed by the Cabinet, but subsequently two cabinet ministers – Brexit secretary Dominic Raab and work and pensions secretary Esther McVey – resigned, saying that they could not support the deal.

The contents of the withdrawal agreement included the UK remaining in a customs union as a way of avoiding a hard Irish border while a long-term trade deal is agreed. This 'backstop' was its biggest point of discourse. It meant that Northern Ireland will also have to stay in parts of the EU single market, thereby tying it closer to Brussels than the rest of the country. Theresa May assured the house by saying that the agreement on a long-term trade deal would mean this would never be used.

 

Gold prices

This news supported the uptrend average seen in gold markets during that time. Gold prices made a massive leap from £926.41 to £947.60.

 

Other key events likely to affect markets during this time

The Eurozone, Germany and Japan released preliminary data on third-quarter growth, China published figures for fixed asset investments and industrial production, Fed Chairman Jerome Powell made a speech, and the U.S. released data on consumer price inflation.

 

How publishing of future Withdrawal Agreement impacted Gold Prices Chart (GPB)

 

 

11. MPs begin Brexit debates

 

4th December 2018

Finally, the Brexit debates in the House of Commons begin. It was clear that reaching a majority was going to be a difficult challenge. There were many different views across the house and MPs seemed to have their own opinion as to what they thought was best for the UK and their constituents.   

 

Gold prices

At the time, there was fear that the rejection of this deal could see Britain leave the EU with no agreement at all, with some economists warning of another major recession. This bolstered gold prices, and as the debates began, gold rode a bullish uptrend, edging up from £969.81 to £970.90.

 

Other key events likely to affect markets during this time

The Bank of England Governor Mark Carney testified about the Brexit Withdrawal Agreement before the Treasury Select Committee, The Reserve Bank of Australia announces its benchmark interest rate, the UK released data on construction sector activity, and New York Fed head John Williams spoke publically.

 

How the beginning of the Brexit debates impacted Gold Prices Chart (GPB) 

 

 

12. Theresa May returns to Brussels

 

11th December 2018

After listening to MPs and accounting major resistance within the house on her proposed withdrawal agreement, Theresa May abruptly postponed her 'Meaningful Vote' to seek further concessions from the EU. The main concern in her proposal was about the Northern Irish backstop arrangements. Perhaps this was another tactic used by the PM to pass time, with European Commission President Jean-Claude Juncker making it very clear that "the deal we have achieved is the best deal possible, it's the only deal possible."

 

Gold prices

This uncertainty pulled markets into limbo, waiting for news on any concessions. Gold prices dwindled and hovered from £989.81 to £990.16 before seeing big downward fall.

 

Other key events likely to affect markets during this time

The UK published its latest employment report, The ZEW Institute reported on German economic sentiment, and the U.S. produced figures on producer price inflation.

 

How returning to Brussels again impacted Gold Prices Chart (GPB) 

 

 

13. Withdrawal deal rejected in House of Commons

 

15th January 2019

As the Brexit deal was debated in The House of Lords, MPs in The House of Commons debate the execution of withdrawal agreement proposal. Still encountering resistance and rebels making themselves known within the Conservative party, the agreement gets defeated by 230 members of parliament, 100 of which were Conservative MPs. This massive loss drove the leader of the opposition to move a motion of no confidence in the Prime Minister. 

 

Gold prices

This gave the markets some positive sentiment and drove investors to other investments. Gold prices declined slightly from £1006.59 to £1005.80 during this time.

 

Other key events likely to affect markets during this time

European Central Bank President Mario Draghi spoke at an event in Strasbourg, the U.S. released figures on producer price inflation and Kansas City Fed President Esther George spoke publically.

 

How the rejection of the Withdrawal Agreement impacted Gold Prices Chart (GPB)

 

 

14. Withdrawal deal 'Plan B' presented

 

21st January 2019

Less than a week after her Brexit plan was defeated in the House of Commons, Theresa May spent a few days in talks with members across all parties to try and break the stalemate. She devises a 'Plan B' agreement, which some argued was the same as the recently-rejected deal. In May's statement, she said it was "clear the government’s approach had to change. And it has." Yet, by the time the statement ended, it was unclear how.

 

Gold prices

This steadied gold prices from a bearish downtrend. Gold prices still went down but the dip was only slight, taking gold prices from £994.58 to £993.05.

 

Other key events likely to affect markets during this time

The U.K. published its latest employment report along with data on net lending, China released data on fourth-quarter growth, as well as figures on investment and industrial production and U.S. financial markets were closed for a national holiday.

 

How presenting 'Plan B' impacted Gold Prices Chart (GPB)

 

 

15. Withdrawal deal 'Plan B' rejected

 

12th March 2019

The 'Plan B' agreement gets voted on in the house, but the Irish backstop has still been unresolved. Many Conservative MPs feared that the it could leave the UK wedded to EU customs rules indefinitely, and the DUP stating that it would create unacceptable border checks between Northern Ireland and Great Britain. This led to the withdrawal agreement being defeated again by 45 votes.

Following on for this, the prime minister said she would now meet with MPs to hear their concerns over Brexit and would be more open with parliament about the next stage of the Brexit process. 

 

Gold prices

This uncertainty made gold rise sharply from £987.41 to £992.92. 

 

Other key events likely to affect markets during this time

The U.K produces data on GDP growth and manufacturing production, the U.S. reports on consumer inflation, and Fed Governor Brainard is to speak at an event in Washington.

 

How the rejection of 'Plan B' impacted Gold Prices Chart (GPB)

 

 

16. Extension until 14th April 2019

 

21st March 2019

The rejection of 'Plan B', and with the imminent Brexit deadline approaching, still no conclusions had been reached. PM Theresa May invited to meet with party leaders to work out alternatives. These MPs later appeared saying that there was no flexibility, no negotiations, and nothing in the agreement had changed. This meant that the UK government had to go back to the EU to ask them for a short-term extension to see if any advancements could be made on the withdrawal deal. This short extension gave the house an opportunity to take a series of indicative votes to see if there was any majority verdicts on how to proceed.

 

Gold prices

As a 'hard' Brexit was looking less likely now, investors weren't in a rush to safeguard. Gold prices dipped slightly from £1000.85 to £997.04 during this time.

 

Other key events likely to affect markets during this time

The U.K. reported figures on retail sales and public sector borrowing, the Bank of England announced its latest interest rate decision, Australia published employment data, New Zealand released data on fourth-quarter growth and The Swiss National Bank announced its latest monetary policy decision.

 

How a further extension impacted Gold Prices Chart (GPB) 

 

 

17. Withdrawal deal rejected for third time

 

29th March 2019

This was supposed to be 'Official Brexit Day', the day the UK would be leaving the EU. After John Bercows throws a spanner in the works by declaring that the same Withdrawal Agreement couldn't be voted on again for a third time without considerable changes, Theresa May gets around this by excluding the Political Declaration from the Withdrawal Agreement. The Withdrawal Agreement was voted on again in the house, and after a heated debate, the deal was rejected again, with a total of 344 voting against and 286 voting in its favour, the motion loses by 58 votes. The default position now was the UK leaving on April 12, with or without a deal.

 

Gold prices

Gold prices were riding a downward trend, and as this news unfolded, it supported the price dip, bringing gold from £993.89 to £986.98.

 

Other key events likely to affect markets during this time

Canada produced data on GDP and raw material price inflation, and the U.S reported on personal spending, PCE price index, business activity in Chicago and new home sales. 

 

How withdrawal deal rejected for third time impacted Gold Prices Chart (GPB)

 

 

18. Further extension requested to 31st October 2019 

 

11th April 2019 

With still no conclusions coming from the House of Commons, EU leaders agreed to offer the UK an extension on article 50 until 31 October 2019 in a bid to avoid a no-deal arrangement. Donald Tusk, the president of the European council, said that until that deadline, "what happens will be in the hands of the UK". He said that the UK would remain a friend of the EU and ended his press conference with "please, do not waste this time."

At this point, we hope that the UK government can come to some sort of arrangement. This overly long extension definitely seems like enough time to come to some form of agreement on how to proceed. Only time will tell.

 

Gold prices

Reassurance that Britain would still be in the Customs Union and as part of the EU gave markets certainty again. Gold prices jolted down from £986.67 to £980.82.

 

Other key events likely to affect markets during this time

The U.K. published data on construction sector activity, the Eurozone published preliminary inflation data, the U.S. reported on durable goods orders, and the Bank of Canada Governor Stephen Poloz spoke publically.

 

How the request of an even further extension impacted Gold Prices Chart (GPB)

 

Conclusion

With the new extension and with new developments coming out every week, we can't predict how the events will unfold and how it will affect gold prices going forward. Physical precious metals are a great safeguard against market instability and economic uncertainty, so if you'd like to get started or simply to discuss your options give Bleyer a call on (01769 618618) or email us at [email protected].

 

Read 'How Gold Value Has Increased in 50 years' here.

 

 

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