Equity markets slumped while gold prices rallied higher as anxious global investors pulled out money from riskier assets ahead of Brexit — considered as the biggest risk to global financial markets since the collapse of Lehman Brothers in 2008. The British would vote to decide whether to stay with the European Union or not in a referendum on June 23. A vote to exit EU is expected to spook global financial markets.
In line with the weakness in global stocks, the Sensex slumped 200.88 points or 0.75 points to end the day at 26,525.46 while the Nifty closed at 8140.75, down 65.85 points or 0.80 per cent. Meanwhile, the prices of gold in the domestic market scaled above its psychological level of Rs 30,000 per 10 gram on Thursday as the metal soared to a two-year high in global trade. “The underlying sentiment towards gold is very positive at the moment as the uncertainty around Brexit is forcing investors to look for safe haven assets. This has lifted gold prices above $1,300 per ounce in the international market,” said Naveen Mathur, associate director, commodities and currencies, Angel Broking.
If Britain decides to exit EU, Mr Mathur believes the domestic gold prices could soar further high. “As of now, it seems gold prices would hit Rs 30,500- Rs 30,600 per 10 gram. If Britain exits EU, the prices could even touch Rs 31,000 per 10 gram as the rupee is expected to weaken amidst outflow of funds,” he added. In case Britain remains with EU, gold prices are likely to retreat to Rs 28,500-Rs 29,000 per 10 gram.