This Sunday, 30th November, Switzerland will vote to decide whether the Swiss National Bank (SNB) should stop selling its gold and instead boost its gold [XAUUSD] reserves from 7% to 20%
If the referendum is successful, the SNB would need to purchase 1500 tonnes of gold, equivalent to 70% of world gold production, for at least 5 years, in order to meet the requirements. The SNB will also no longer be able to defend the minimum exchange of CHF at 1.2 to one euro that has been maintained for three years.
An opinion poll last week by Swiss media outlet 20 Minuten reported 58% of respondents would definitely vote "no", while just 23% would definitely vote "yes" CNBC reports. Meanwhile, gold prices have continued to drop this week, trading at $1,187.8 per ounce on Friday morning, at $1193.95 on Monday, down on USD strength to $1188.60 on Wednesday and currently trading a bit lower at $1188.48.
Willem Buiter, Citi’s global chief economist identified the Swiss vote as ridiculous and stated that no self-respecting central bank should ever put a large investment in a single commodity, also reported by CNBC.
Although, the referendum is not expected to have a ‘yes’ result, many analysts expect gold prices to drop further on Sunday night, but probably not for long.
EURCHF is trading at its lowest since 2012, at 1.20138
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