Gold wins from Brexit. But other commodities lose

GOLDBUGS are natural Brexiteers; intensely suspicious of large bureaucracies like the European Union and avid conspiracy theorists when it comes to the power of global “elites”. They had double reason to celebrate on June 24th, when Britain’s decision to leave the EU sent gold prices soaring. But the rise of the yellow metal is also a symptom of the fear that Brexit is unleashing on the global economy. Hence other commodities that are more dependent upon global demand, such as oil, fell sharply.

After a huge rally since their trough earlier this year, the commodities markets were vulnerable to a shock. Hedge funds and other money managers had built up big bets on rising prices. Meanwhile, inflows into exchange-traded funds linked to gold have been consistent since the start of the year, according to Deutsche Bank.