Gold Firms Within Friday's Broad Range

Gold is firmer within Friday's broad post-Brexit range. The yellow metal remains well bid, despite strong gains in the dollar amid ongoing interest in safe-havens.

Global shares remain under pressure, as does the British pound and the euro. Sterling set a new low against the dollar at 1.3119, a level not seen since 1985. Investors remain rattled by the surprise Brexit vote and broad uncertainty about the longer-term implications.

One thing seems clear already, yields are going lower. Japanese rates fell to record lows: 30-year 0.11%. 20-year 0.08%. 10-year -0.20%. German 10-year bunds settled at -0.12%. Our 10-year Treasury notes are trading around 1.46%, after pressuring the 1.40% level on Friday. The all-time low was set in July 2012 at 1.38%.

Bank of America sees further central bank easing ahead:

Central banks that held their fire ahead of the UK referendum may soon deploy additional easing. Some fiscal stimulus is likely as well. In particular, we look for the BOJ and RBA to ease further at upcoming meetings, and the ECB to extend QE at its July meeting. We expect the BOE to cut rates by 50bp to zero in July and to expand QE by £50bn within the next few policy meetings. — Bank of America

With competing sovereign debt offering negative yields, there is certainly further downside potential for U.S. rates. A number of widely respected fixed income analysts are predicting new record lows in the 10-year yield. "The ultimate next stop in terms of, if the cycle of economic growth cannot be rejuvenated by current interest rates, is probably around 1.25%," Janus' Bill Gross said in a Bloomberg TV interview last week.

— Neil Irwin (@Neil_Irwin) June 27, 2016

I hope you do, because you're not likely to see another one for quite some time. Fed funds futures suggest there is a 0% chance of a rate hike through the November FOMC meeting. Beyond that, odds of a tightening are less than 15% through February of 2017; which is as far out as the CME's FedWatch tool goes.

Note that Bill Gross believes that growth risks are the driving force behind falling yields. Brexit is amplifying the risks, but these risks would still be there, even if the UK had voted to remain in the EU.

Gold tends to thrive in a low/no/negative yield environment. While the yellow metal may have been boosted in the short-term by the surprise (at least to many seemingly) outcome of the UK referendum, these investments are likely to prove 'sticky' as the underlying growth and price risks come back into focus.