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What Does the Interest Rate Hike Mean for the Gold Price?

Wednesday, November 8, 2017

On the 2nd November, the Bank of England announced an interest rate hike. The move sees the rate return to its 2016 figure of 0.5 per cent, having been halved to 0.25 per cent after the Brexit referendum.

Interest rates 2007-2017

The Bank last increased interest rates in May 2007, from 5.5 to 5.75 per cent, a move which was reversed in December that year.

Rates were then cut sharply following the financial crisis. Over the course of 2008 to 2009 the rate was lowered several times from 5.5 per cent at the start of 2008 down to 0.5 per cent by the end of 2009.

The Deputy Governor of the Bank of England, Ben Broadbent, suggested in an interview with the BBC that two further rate hikes will be needed in the coming years to return the UK to its 2 per cent inflation target.

What does this mean for me?

Higher interest rates mean banks charge more to lend money. Payments on mortgages, bank loans and overdrafts will likely increase. Banks have been typically slow to reflect the rate increase in their savings accounts but savers can expect to accrue an extra £25 a year for each £10,000 held in savings.

What does this mean for gold prices?

The hike in interest rates hasn’t had a noticeable effect on the price of gold, which is closely linked with US interest rates. The price of Sterling, however, decreased on the 2nd November, meaning the effective price of gold and silver in Sterling has risen.

  • Between 02:00 and 18:00, the pound lost 1.73 per cent of its value against the dollar, falling from $1.329 down to $1.306 for £1.
  • The price of a troy ounce of gold against Sterling therefore increased between the same times by 1.54 per cent, from £963.47 to £978.26.

A good time to sell scrap gold?

If you want to take advantage of the higher gold price in uncertain economic times and sell scrap gold, then contact us today to find out how much it could be worth. If you want to find out more about gold prices over October, read our update here.

Gold Price Sees Modest Increase in October

Wednesday, November 1, 2017

After swings in the gold price in September, October’s prices remained fairly consistent. The gold price began with a seven-week low, at £956.05 for a troy ounce, and finished on the 30th of October at £964.55.

Prices across the month rose by 0.89 per cent, but peaked on the 12th October at £985.80.

Iran & North Korea

Prices rose rapidly in the first week of October, as tensions in Iran & North Korea increased and investors made their traditional turn towards gold in times of uncertainty. This trend continued until the 9th October, when prices reached £980.86, before dipping on the 11th.

The price rose once again to its October height of £985.80 on the 12th October, ahead of US inflation rate revelations.

Strong dollar weakens gold price

Fluctuations continued over the next week, peaking again on the 16th October at £984.31 and the 19th at £980.99.

The gold price then declined gradually over the rest of the month and hit a notable low of £965.19 on the 23rd October, following the re-election of Japanese Prime Minister Shinzo Abe, which strengthened the dollar.

This decline continued throughout the rest of the month to £964.55 on the 30th October, with a brief peak of £971.38 on the 28th, thought by analysts to be related to the political situation in Spain.

Weak economic forecasts

Amid the slight rise in the gold price, the UK economy is responding to weak economic data in growth and productivity. In addition to this, the price of Sterling decreased against the dollar by 1.59 per cent during October.

Sell scrap gold at The Gold Bullion Company

If you’ve been hit by the recent run of gloomy UK economic data and want to access some quick cash, don’t forget that the Gold Bullion Company also buy gold. So if you’ve got any gold coins, gold bars or even gold jewellery that you’d rather have the cash for then get in touch with us today to find out what it could be worth.

What Precious Metal Should I Invest In?

Friday, October 20, 2017

If you’re a first time investor looking to make the most money from precious metals, it pays to do your research before you start parting with your cash. Apart from the prices, which vary widely, the properties and practicalities of each metal mean that they each have something different to offer investors.

Here’s a quick breakdown of the main types of precious metal bullion and which ones might be the best investment for you.

Gold bullion

Gold is known as a reliable investment. Historically, we have seen gradual rises in the gold price over time. This precious metal tends to hold its value. While national currencies are subject to economic volatility, demand and prices for gold tend to increase as economic outlook decreases.

Consequently, the gold price rose to new highs after the financial crash, peaking around 2012. This has since reduced, but global recent political uncertainty during 2016 and 2017 is causing prices to rise again.

For this reason, gold is largely seen as a good commodity for the protection of wealth over time. The fact that it’s a very dense metal also means that it is practical for storing a large amount of wealth if you want to buy gold bullion.

Silver bullion

Historically, silver prices were more volatile than gold, but in recent years this hasn’t always been the case. Though silver is much less valuable than gold, its value tends to increase and decrease broadly in line with gold.

The fact that silver is less valuable than gold means that it can be the metal of choice for investors looking to buy and sell on a smaller scale. If you’re looking to invest a lot of money in precious metals, however, it may prove more difficult and even potentially impractical to invest in silver in such large volumes if you’re seeking to buy physical silver bars.

Platinum and palladium bullion

Palladium and platinum have very similar properties to one another. Both of them are rarer than gold and are almost exclusively mined in South Africa. They are more often mined as by-products of other metals than on their own, and demand for them can change very drastically over a short period.

The prices for these precious metals are much more volatile than gold because the variations in supply and demand greatly affect the prices. This creates opportunities for investors who are looking to make a sharp profit – but of course comes with a much greater risk than the more predictable behaviour of gold and silver.

Unlike gold, the price of platinum and palladium tends to increase in times of economic stability, and decrease during volatility or crisis.

The right previous metal depends on your personal circumstances and appetite for risk. Whichever you choose, be sure to keep an eye on the prices to get an understanding of the market before you invest.