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A new report out late Wednesday cited an unnamed European Central Bank official as saying that the bank is not planning any sudden stop of its asset-purchase programme, nor are rate hikes imminent. The news cratered euro, sending the currency on its largest tumble in five weeks.
Short term
Trade view / 09 June 2016 at 11:00 GMT

#SaxoStrats: Opt for gold in those Brexit hills

Head of Commodity Strategy / Saxo Bank
Denmark
Instrument: XAUUSD
Price target:
Market price:

t Background

The UK's vote on whether to remain in the European Union or leave set for June 23 should in general have a limited impact on commodities with the main impact coming from potential currency movements, especially in the aftermath of a leave vote.

However heightened event risk and the uncertainty related to the market impact of a leave vote could provide precious metals with additional support and we particularly favour gold as part of a safe-haven asset flight.

While we overall maintain a positive outlook for gold as it pushes beyond $1,250/oz, we prefer to express the event risk related to the vote through options. 

For more details on this trade, view the related video here.

Management and risk description

We cover this through options to mitigate risk. See video release here for more.

XAU $1,275/oz Call @  $12.50/oz (ref. $1,243.50/oz)
XAU $1,300/oz Call @ $7.50/oz    (ref. $1,243.50/oz)

The risk is confined to the premium paid.

Time horizon: June 24.

Gold consolidating above $1,250/oz ahead of the UK's EU referendum vote

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Source: SaxoTraderGO

Gold five-year chart

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Source: SaxoTraderGO

Trading the Brexit vote?
Find more analysis, insight and essential resources on our dedicated Brexit page.

— Edited by Martin O'Rourke

Non-independent investment research disclaimer applies. Read more

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