This has been a good year for gold investors: the yellow metal has risen more than 25 percent year-to-date. Until this Friday, Gold, trading above $1,332.47 an ounce, was headed for its fifth weekly gain.
Aside from gold, silver traded above $19 an ounce. Since the start of the year it has climbed by 35 percent.
Apparently, the U.K.'s decision to leave the European Union in last week's referendum has provided precious metals with a big boost as investors flock to safe-haven assets such as silver and gold.
Moreover, with the current outlook of political and economic uncertainty set to continue, precious metals are likely to remain attractive assets for investors.
According to James Butterfill, executive director and head of research at investment strategy at ETF Securities, money poured into ETFs is a major reason behind this phenomenon. His research shows that there has been, since the referendum result, $335 million of inflows into precious metal on the back of Brexit concerns.
Butterfill added that his company had forecast gold prices reaching $1,440. Many investors are also switching to silver, because it is currently priced lower than gold and valuations look attractive, he explained.
According to Societe Generale, gold is being supported by safe-haven bids following Brexit. The bank raised its short-term price forecasts for both metals: it expected gold to hit $1,350 by the fourth quarter of 2016, compared to its previous forecast of $1,150.
"Gold prices soared on safe-haven buying, following the U.K.'s decision at the referendum on June 23rd to leave the European Union, which has sent shock waves and triggered severe sell-offs across global financial markets," said Robin Bhar, head of metals research at Societe Generale, “This translated into even more spectacular gains in the sterling-denominated gold price, which jumped by 18 percent on the 24th from the previous day's closing value, to a high of £993 per ounce for the first time in more than three years."
In addition, the plunging value of the pound also impacted the metal, as it in effect boosted the price of sterling-denominated gold.
"The British pound plunged by 12 percent on an intra-day basis on the day when the 'leave' outcome was announced,” Bhar further explained.