Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Why US Interest Rates are a Nothing Burger - 24th May 24
Big Banks Are Pressuring The Fed To Losen Protection For Depositors - 24th May 24
Another Bank Failure: How to Tell if Your Bank is At Risk - 24th May 24
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24
Micro Strategy Bubble Mania - 10th May 24
Biden's Bureau of Labor Statistics is Cooking Jobs Reports - 10th May 24
Bitcoin Price Swings Analysis - 9th May 24
Could Chinese Gold Be the Straw That Breaks the Dollar's Back? - 9th May 24
The Federal Reserve Is Broke! - 9th May 24
The Elliott Wave Crash Course - 9th May 24
Psychologically Prepared for Bitcoin Bull Market Bubble MANIA Rug Pull Corrections 2024 - 8th May 24
Why You Should Pay Attention to This Time-Tested Stock Market Indicator Now - 8th May 24
Copper: The India Factor - 8th May 24
Gold 2008 and 2022 All Over Again? Stocks, USDX - 8th May 24
Holocaust Survivor States Israel is Like Nazi Germany, The Fourth Reich - 8th May 24
Fourth Reich Invades Rafah Concentration Camp To Kill Palestinian Children - 8th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Duel Between Johnson and Parliament. Will Gold Win?

Commodities / Gold & Silver 2019 Oct 24, 2019 - 08:33 AM GMT

By: Arkadiusz_Sieron

Commodities

Boris Johnson struggles to push the Brexit agreement through the British Parliament. For it can bite back! Who wins this battle? One could hope that gold, but this is not so certain…

Johnson’s Struggle, Explained

On Thursday, the breaking news came out that the EU and the UK reached agreement on Brexit. The agreement scrapped the Irish backstop that had formed the bulk of the opposition to the former proposals. Naive who believed that it would change something! We have to admit that we thought for a while that finally the Brexit saga was coming to an end.

But the British government still has a long way to go! On Saturday, the Parliament voted for a change to the sequencing of the ratification of the deal. It means that they withheld support on Johnson’s Brexit deal until all the necessary legislation is passed. In this way, the lawmakers forced the prime minister to write a letter to the EU requesting a delay until January 31.


Poor Johnson! It must have been tough for him, as he said previously he would rather be “dead in a ditch” than ask for a delay. Yes, it must have been humiliating for him, as he broke his “do or die” pledge to leave on October 31. So being upset, Johnson sent a letter, but did not sign it! How clever! Only an Eton and Oxford graduate could come up with such a brilliant idea. He also included a second letter (signed!) that made it clear he did not agree with the first letter. He wrote “a further extension would damage the interests of the UK and our EU partners, and the relationship between us.” Have your cake and eat it too, anyone?

The EU has not yet given a clear response. Donald Tusk, the EU Council President, has said he has received Johnson’s unsigned request and is consulting with EU leaders on how to react. However, the EU is unlikely to deny the extension request. After a short meeting on Sunday, the European diplomats decided to play for time and to wait to see how things will develop in London. And indeed, this might be very interesting.

On Monday, Johnson got some more bad news. The House of Commons speaker John Bercow refused to allow a vote on Johnson’s Brexit deal. We are starting to love British politics – it’s better than the best comedy drama!

What’s now? Yesterday, there was the first reading of the withdrawal agreement bill, which lays out the legal basis for UK’s withdrawal under treaty with the EU. Today, the second reading, with the first vote, is taking place. The next phase will be crucial, as the MPs could then start adding amendments. They could, thus, spoil the legislation, postponing Brexit or even forcing Johnson to scrap the bill. For example, the MPs could add an amendment that keeps the UK within the EU customs union or that requires a second referendum. Johnson would be really happy then!

Implications for Gold

What does it all mean for the gold? Well, it’s hard to tell, as the Brexit saga is getting more and more complicated and everything is changing quickly. But there is a hint. The waves of Brexit optimism, triggered by the announced agreement between the EU and the UK government, pushed the U.S. dollar toward its worst month since January 2018. Meanwhile, the euro moved higher against greenback, but when the Brexit process was once again thrown into disarray on Monday, the U.S. dollar recovered some of the earlier losses, as the chart below shows.

Chart 1: EUR/USD exchange rate from October 9 to October 22.

And what about gold? The yellow metal declined yesterday, as one can see in the chart below.

Chart 2: Gold prices from October 20 to October 22, 2019.

It may suggest that with the current market sentiment, gold is more sensitive to the developments in the foreign exchange market triggered by the Brexit drama that to the Brexit drama itself and the related uncertainty! Yes, gold is a safe-haven asset, but it is also a currency, sensitive to what is happening with other currencies! One thing is certain, though, the Brexit is far from over, and British politics may surprise us again!

If you enjoyed the above analysis, we invite you to check out our other services. We provide detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. If you’re not ready to subscribe yet and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!

Arkadiusz Sieron
Sunshine Profits‘ Market Overview Editor

Disclaimer

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Arkadiusz Sieron Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in