According to Barclays, the Swiss central bank would have to buy almost as much gold as all the global holdings of physically backed ETFs. If the vote is passed, Barclays calculates that Switzerland will increase demand buy about 300 tons per year, with a period of five years to buy more gold. Over the past few years, Switzerland has been selling gold to purchase euros in an attempt to stave off strong safe-haven demand, and its reserves are now at its lowest since the IMF has collected data since 1948.
Gold prices have been tumbling as a recovering U.S. economy and improved equities have helped shift investors into a risk-on mindset. Additionally, the recent gains in the U.S. dollar has also weighed on commodities, which become more expensive to overseas investors.
“Our forecast is for a strong dollar this year and next, and that has more than anything else got the gold market on the defensive right now,” James Steel, an analyst at HSBC, said in the article.
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Max Chen contributed to this article.