Blame gold’s free fall on the Fed, but if a long-shot referendum passes it could be the Swiss National Bank that stops it. Gold has been dropping as the dollar has been strengthening on better U.S. data and also as the Fed gets closer to the day it will start raising interest rates.
As the precious metal continues to look for a floor, traders are eyeing a Swiss referendum Nov. 30 that could require that country’s central bank to hold 20 percent of its foreign exchange reserves in gold. So far, polls show only about 2 in 5 Swiss voters would cast their votes in favor of it, strategists say.
According to Jim Steel, head of commodities strategy at HSBC, the SNB currently holds about 7.8 percent of its reserves in gold and that would require massive purchases. So far it seems unlikely to pass, but if sentiment changes and it looks like it would be approved, gold could quickly gain $50.