Swiss voters rejected two closely watched referendums on Sunday that would have forced the central bank to buy up massive amounts of gold and introduced strict new limits on immigration, in a result that could bolster its economic ties to the European Union.
Proposed by the right-wing Swiss People’s Party out of concern that the Swiss National Bank has already sold too much gold, the measure would have compelled the SNB to boost its gold reserves to 20% from around 8% currently. Switzerland already holds the most gold per capita in the world.
An initial analysis of the voting trend from Swiss broadcaster SRF showed voters were likely to have turned down the “Save our Swiss gold” initiative.
A report from Bloomberg said the measure was voted down by a margin to 78-22.
If Swiss voters had approved the measures, it would have severely complicated policy at a time when the central bank is trying to defend a 1.20 euro cap on the Swiss franc imposed at the height of the euro crisis.
Earlier this month, gold futures went on a wild ride after polling data showed an advantage in favour of votes against measure. Previous polls had shown about an even split among voters.
Swiss were also set to reject a separate initiative that aimed to cut annual immigration by three-quarters from current levels in order to reduce the strain on Switzerland’s natural environment, and a third referendum aimed at scrapping a tax perk for wealthy foreigners was also set to be defeated.
Over the last several months, the price of gold has been declining sharply, with the precious metal currently near mu tli-year lows.
On Sunday morning, gold futures weren’t trading, but futures settled at around $US1,165 an ounce on Friday, their lowest since hitting around $US1,150 earlier this month, which was gold’s lowest level since 2010.
Rejection of the measure, while not a huge surprise, likely comes as a relief both to Swiss and European monetary policy makers, who are currently facing a lack of inflation, poor economic growth, and record-low bond yields on the continent.
This week, the European Central Bank will meet, and many in the market will be focused on any clues about whether or not the central bank will launch a full quantitative easing program similar to those undertaken by Japan and the US to help boost the European economy.
(Reporting from Reuters by Alice Baghdjian; Editing by Caroline Copley.)
Business Insider Emails & Alerts
Site highlights each day to your inbox.