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Brexit: Pound's Slump to Hit Jewelry Importers
Jun 26, 2016 7:53 AM
By Rapaport News
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RAPAPORT... The U.K.’s National Association of Jewellers (NAJ) warned
the cost of making and importing jewelry in the country will rise, after the
nation voted on Thursday to leave the European Union (EU).
Gold surged 4.7 percent on Comex, according to data compiled
by Bloomberg, and the pound depreciated to
its lowest level in more than 30 years relative to the dollar after results from
the 'Brexit' referendum started trickling early Friday. The euro also slumped 4 percent
as Europe’s second-largest economy snubbed the EU.
“The financial and commodity markets are in turmoil,” said
Michael Rawlinson, chief executive officer of the NAJ (pictured). His pronouncement was
echoed by the Federation of the Swiss
Watch Industry, which also said the result is “bad” for the Swiss watch
industry, according to a report from swissinfo.ch.
“The drop will affect the prices of materials we buy to make
jewelry – metals and gemstones – and also the price of imported jewelry, at
least in the short-term. We need to see what this means in the longer term. We
have a robust industry that has traded successfully when the price of gold was
much higher than it is today.”
Gold, which investors traditionally buy in times of financial uncertainty, looks set to rise even higher, said Marie Owens Thomsen, chief economist at Indosuez Wealth Management, according to a CNBC report.
"Now that the U.K. has voted to leave, we think there's
a higher probability that the $1,350 to $1,360 per ounce level can be breached,
and we're therefore looking for an extended target in the $1,400s,” Owens Thomsen said.
The U.K.’s FTSE 100 index of equities plunged 8.4 percent as it
opened for trading Friday after the result of the vote had been announced,
according to Yahoo Finance. Anglo American, the parent company of De Beers, initially plummeted
17 percent but ended the day about 5 percent down. Gem Diamonds slumped 13 percent and recovered to fall 6.3 percent on Friday.
In the U.S., Signet Jewelers
stock fell 4.1 percent at first and ended the day roughly 5 percent lower. Some 11.3
percent of the retailer’s global sales in the past fiscal year came from its
U.K. jewelry division.
Financial-market volatility and the rise in the price of gold "are unfortunate as they may tend to persuade
consumers not to buy jewelry," said Ernie Blom,
president of the World Federation of Diamond Bourses.
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Tags:
Brexit, Britain, EU, European Union, Rapaport News, u.k.
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