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Gold price remains steady as Fed leaves US rates on hold

Thursday, April 28, 2016

It’s been a steady week for the gold price, which has hovered around the £850 per troy ounce mark as investors waited for the US Federal Reserve’s latest decision on whether to increase the cost of borrowing.

As had been widely expected, the US central bank decided to leave interest rates on hold when it met on Wednesday (27 April). As a result, the gold price rose to after the announcement and this morning at 08:00, gold was priced at £859.77per troy ounce.

The gold price has been stable for much of the week, although down on last week’s highs, as a result of worse than expected economic news from the US. Figures showed that orders for durable manufactured products did not improve as much as has been predicted and data in a separate report pointed to a slip in consumer confidence.

Concerns about the economy tend to bolster the value of gold as investors head to the precious metal as a safe haven for their cash.

Gold demand dips among dentists

The use of gold in the dental industry is falling, as patients seek whiter smiles, according to figures from the World Gold Council.

Whereas around 67 tonnes of the precious metal were being used by dentists worldwide a decade ago, the figure had slumped to around 19 tonnes during 2015. A combination of people’s desire for a Hollywood white smile and the high gold prices achieved during the recession are being blamed for the trend, which has seen demand for gold in dentistry fall by around 60 per cent since the start of the decade.

Lindsay Richards, dean of dentistry at the University of Adelaide in South Australia, told IOL: “We hardly ever use gold in front teeth now, almost never. I would’ve last done a gold filling 10 years ago in a front tooth. For the back teeth, it’s still an excellent material, but people don’t like the look of it.”

Rise in counterfeiting detected

Gold coin and bar buyers are being urged only to use reputable dealers after a rise in counterfeits coming on to the market.

The reports from the US suggest that much of the fake gold for investment is coming from China. Fraudsters have manufactured counterfeit coins, packaging and even certificates of authenticity. In some cases, ‘gold’ bars have been discovered to be made from tungsten and painted with gold leaf.

Writing in Newsmax, gold industry and coin expert, Mike Fuljenz said: “Whenever gold makes a positive move up, as it has done in the first quarter of 2016, we see ads from coin dealers sprouting up like weeds.  Publications have little or no way to check-out advertisers.  Their main criterion for reliability is whether their check for the ad’s payment clears the bank.  Don’t be tricked by an ad on the Internet or on late-night TV.”  

At the Gold Bullion Company, we’ve been trading for more than 20 years and have a reputation for trustworthiness in the industry. Dealing with an established supplier means you can be confident about the gold investments you make. 

Counterfeit bullion bars and coins increase - Gold Bullion

Monday, April 25, 2016

Buying gold coins is a great way to start investing in precious metals, but it’s important to know what you are buying.

Reports from the US suggest there has been a rise in counterfeit gold bullion coins and bars being uncovered. It’s of little surprise that the fraudsters are trying to cash in as gold enjoys an upswing in value among investors.

Always ensure you are buying from a reputable dealer that is well-established and has a good reputation in the market. Too good to be true prices when it comes to gold are usually exactly that.

According to Newsmax, many of the fraudulent coins and bars appear to be coming from China. It reported that apparently professionally packaged gold bars that looked exactly like those produced by a Swiss dealer had been found. Experts have also uncovered cases of counterfeit American Eagle gold coins and ‘gold’ bars made from tungsten and painted with gold leaf.

Gold industry and coin expert, Mike Fuljenz, wrote: "Whenever gold makes a positive move up, as it has done in the first quarter of 2016, we see ads from coin dealers sprouting up like weeds. Publications have little or no way to check-out advertisers. Their main criterion for reliability is whether their check for the ad’s payment clears the bank. Don’t be tricked by an ad on the Internet or on late-night TV."

US TV station KVRR also revealed a significant increase in reports from dealers of counterfeit coins over the past 12 months. It said that everything from the coins themselves to the packaging and certificates were being faked, and again pointed the finger at Chinese-made counterfeits. In many cases, fraudsters are understood to be buying fake coins and mixing them in with the genuine article in an effort to fool buyers.

The Gold Bullion Company was set up in 1993 and has established a reputation for fair and honest trading. Not all coin and bullion bar companies can say the same, so think before you buy from a less-trusted source.

Steady week for gold but silver on the rise again - Gold Bullion

Thursday, April 21, 2016

The gold price has remained pretty steady in the first half of this week, although it was down from the highs seen at the end of last week.

For precious metal watchers and investors, the big story has been the continued rise in the value of silver. It has now reached its highest price in 11 months and has already increased in value by 11 per cent so far in April. Reuters reported that silver is now on course to record its biggest monthly gain since June 2014.

Silver reached £12.02 per troy ounce on Tuesday (20 April) and the gold/silver ratio – how much silver it takes to buy one troy ounce of gold – was at its lowest in almost six months, at 73.1.

ABN Amro analyst Georgette Boele said: "If you look at the long-term outlook for the gold/silver ratio, it can go a lot lower. That would mean that if you're optimistic on gold prices, silver can go a lot higher."

Future factors for gold

The steady gold price this week, which has hovered around the £871 per troy ounce mark, has been largely due to a quiet period for economic news.

Rob Haworth, from the Seattle-based US Bank Wealth Management, said that in order to rise, the gold price needs “a clearer indication of central bank policy and some other demand indicator”.

That could come later today (Thursday), when the European Central Bank (ECB) meets to decide on its latest interest rate policy, and with the forthcoming meeting of the Bank of Japan. The ECB is widely forecast to leave interest rates across the eurozone on hold.

However, Simon Gambarini, an analyst with Capital Economics, said he expected to see some further increases in the gold price although there would be fluctuations.

He said: "Sentiment towards precious metals, particularly towards gold and silver, has been quite good both in the futures market and the ETF market, and that should help build a floor underneath prices."

Will the gold price continue to rise?

Investor interest is being credited with gold’s high-flying performance so far in 2016.

Charles Morris from the AtlasPulse Report, told the Daily Telegraph: “Changes in investor interest explain 80 per cent of the move in the gold price. When they buy, it rises, and when they sell, it falls. It is as simple as that.”

But not all analysts are united on where the gold price will go from here. While Citi said in a report that it expects risk factors to calm, leading to better equity market performance and less interest in the precious metal, HSBC expects further rises on the back of recent momentum.

The bullish view for gold is also backed by expectations that central banks’ policy of trying to stimulate the global economy with lower interest rates will not be sufficient.

According to the World Gold Council, there is a threat of negative interest rates which it said was pushing central banks and institutional investors towards the safe haven offered by gold. 

Analysts uncertain if price of gold will continue to rise

Monday, April 18, 2016

There are mixed views from analysts on whether the current rally in the gold price can be sustained over the longer term.

During the first quarter of this year, the gold price was helped by the global financial and political uncertainty: reports of a slowdown in China and terror attacks and threats. This helped to quash the value of currencies including the US dollar.

A report by Citi said: “As risk calms down, equity markets perform well and long end yields in the US and Germany .... rise, that is not a recipe that favours gold.”

However, HSBC took the opposite view and said momentum was up and it was expecting the gold price to increase further.

The better gold prices are also due to a combination of investment from central banks, institutional and private investors.

Charles Morris from the AtlasPulse Report, told the Daily Telegraph: “Changes in investor interest explain 80 per cent of the move in the gold price. When they buy, it rises, and when they sell, it falls. It is as simple as that.”

The threat of negative interest rates is also pushing buyers towards the precious metal, amid fears policies by global central banks will not be enough to stimulate the worldwide economy.

Alistair Hewitt, head of market intelligence at the World Gold Council, said: “Negative interest rates are the key reason why central bankers and institutional investors are now returning or expanding their allocations to gold.”

Sellers of physical gold coins and bars, like the Gold Bullion Co, have seen an upsurge in interest and new customers since the start of the year. Whether the rally is sustained or not, it’s still a good time to get in with gold investment, as prices could well go much higher. Remember, with any form of investment, prices do go down as well as up. 

Gold slips slightly but silver turns in sterling performance

Thursday, April 14, 2016

Gold lost some ground on Wednesday (13 April) from its three-week peak recorded at the start of the week, as the US dollar increased in value and there was stronger news on China’s economic performance.

Gold tends to be strong when the dollar is weak and vice-versa, and the precious metal had benefited from recent dips in the value of the US currency. The dollar had fallen to its lowest value in almost eight months at the start of the week, but it made some gains on the back of the positive economic data from China and improved performances in the European stock markets.

Afshin Nabavi, head of trading at MKS, told Reuters: “Stronger equities and a relatively stronger dollar have put some pressure on gold.”

Gold’s highest value so far this week was on Monday (11 April), when it reached £888.16 per troy ounce at 07.15. This morning at 08:30 (Thursday), gold was valued at £878.61 per troy ounce.

Sterling performance from silver

All eyes may have been on the gold price so far this year, but silver has also been attracting investors and making gains.

In fact, this week the gold-silver ratio – how many ounces of silver are required to buy one ounce of gold – actually saw silver outperform gold. Gold fell to a three-and-a-half-month low on the ratio, as silver added value.

Silver hit its highest value in almost six months this week, when demand helped push the price over the £11.25 per troy ounce mark.

Reuters reported that there have been “sharp inflows” into silver-backed exchange traded funds, showing keen interest from investors. Silver, like gold, is widely used in technology and is also a key part of many industrial processes.

As well as funds, silver coin collecting is also a good way to start your silver investment, and the current decent prices are certainly worth keeping an eye on.

Gold scores best quarterly performance in three decades

The resurgence in the gold price seen so far this year is the best in almost 30 years, according to the World Gold Council’s (WGC) analysis of the quarterly figures – and the organisation sees no sign of demand for the precious metal running out of steam.

Between January and the end of March, the gold price jumped by 17 per cent in dollar terms. Its performance was also ahead of other major commodities and bonds as investors sought a safe haven for their money in stormy economic seas.

The WGC report on the first three months of the year said: “So far, we have had one very strong quarter.

“But inflows into gold look, to us, set to remain robust in second quarter, as the current macroeconomic environment remains supportive for both investment and central bank demand.”

The report also noted the strong demand from investors for gold bullion coins. Figures showed that sales of the US Mint’s 24 carat Buffalos and 22 carat Eagles were 51 per cent higher than during the first three months of last year. 

World Gold Council predicts further strengthening of gold price

Monday, April 11, 2016

Gold’s performance in the first three months of 2016 was the precious metal’s best quarterly showing for almost 30 years.

The gold price rose by 17 per cent in US dollar terms and performed better that other major commodities and bonds, the World Council said.

It put the sparkling first quarter down to concerns about growth and financial stability in emerging markets and negative interest rate policies put in place by major central banks. It also rallied because of a break in the increasing value of the US dollar and benefited from a combination of the return of demand for gold and investors’ decisions to put their money into bullion on the back of its rising value.

The World Gold Council’s quarterly analysis expects these factors to feed into continued demand for gold over the next few quarters. It said that comparing the last three months to previous cycles suggests that “we may be entering a new bull market for gold”.

The report said there have been five bull markets followed by five bear markets for gold since the 1970s. During the previous bear markets, which lasted an average of 52 months, the gold price dipped by between 35 per cent 55 per cent.

“History also shows that two consecutive quarters of strong returns have typically resulted in a more sustained rally,” said the World Gold Council.

“So far, we have had one very strong quarter. But inflows into gold look, to us, set to remain robust in second quarter, as the current macroeconomic environment remains supportive for both investment and central bank demand.”

Demand for gold bullion coins among investors has also been high in January to March. Figures from the US Mint show that sales of 22 carat gold Eagles and 24 carat gold Buffalo coins combined were 51 per cent higher than in the first quarter of 2015. 

Fed minutes’ approach leaves gold price steady - Gold Bullion

Thursday, April 7, 2016

The gold price changed little after the US Federal Reserve released the minutes of its latest rate-setting meeting to the public on Wednesday (6 April).

The market had been waiting to hear the drivers behind the central bank’s decision to leave the cost of borrowing unchanged when it met in March.

The minutes revealed that although members expected strengthening news from the US labour market and an expansion of economic activity, “they saw global economic and financial developments as continuing to pose risks”.

James Steel, an analyst with HSBC, said: “Gold thrives in periods of heightened uncertainty… There appears to be enough uncertainty to prop up gold and the financial markets are no longer focused on the possibility of a near-term Fed rate hike. This relieves gold of a major weight, at least for the moment.”

The gold price dipped by around half a per cent after the minutes were released but quickly recouped its losses as the full story of a cautious approach by the Fed was absorbed by the market.

The gold price started this week at £856.85 per troy ounce on Monday (4 April) and dipped to £850.88 by 21.30 that evening. However, it hovered around the £870 mark for much of Tuesday and Wednesday. This morning at 08:00 (7 April), gold was £873.04 per troy ounce.

A look at the week ahead for gold

Next week’s gold price is expected to be impacted by the meeting of the International Monetary Fund (IMF). Analysts predict that the IMF will again downgrade the global growth forecast due to the commodities downturn that has hit nations including China, Brazil and Russia, FastMarkets reported.

This could again send the gold price higher if investors continue to seek a safe haven for their cash.

FastMarkets metals analyst, Boris Mikanikrezai said: “The resurgence of risk aversion could bode well for gold due to its safe-haven characteristics.

“Still, the speculative positioning is overstretched on the long side while ETF (exchange traded fund) demand is pausing after three months of intense buying. Against this backdrop, upward pressure could be contained.”

Rare gold bullion coin returns to the market

A giant gold bullion coin, worth around £3.8 million, is coming back on to the market for collectors and investors.

Just five of the huge coins, which are 99.999 per cent pure gold and weigh a staggering 3,215 troy ounces each, were made by the Royal Canadian Mint in 2007. They were initially marketed as the million dollar coin, but due to the rise in the gold price and the fact they have such rarity value for collectors, the cost of buying one has soared.

The coin features Queen Elizabeth II on the heads side and a maple leaf on the tails side. It is legal tender in Canada, where it has a face value of CAN $1 million.

All five of the coins were bought by private investors and this is the first time one has returned to the market since they were initially minted.

Giant ‘million dollar coin’ back on the market - Gold Bullion

Monday, April 4, 2016

One of the rarest gold coins ever made is back on the market, with a price tag of around £3.8 million at current gold prices.

The Royal Canadian Mint only made five of the giant 99.999 per cent pure gold coins in 2007. They were dubbed the million dollar coins but have since soared in price, showing the value that gold coin investment can earn in the longer-term.

The coins weigh in at a hefty 3,215 troy ounces each. All five were bought by private investors and only one is currently for sale. The coins were originally designed as showpieces, but they are legal tender in Canada with a face value of Can. $1 million. However, both the gold price and the rarity of the coins have pushed up the price that collectors are willing to pay for them.

The bullion coin is one of the largest ever made. It features a portrait of the Queen by Canadian artist Susanna Blunt on the obverse side. On the tails side is a maple leaf designed by Stan Witton of the Royal Canadian Mint.

The mint is a well-known designer of collectible coins in both gold and silver. It’s the home of the popular Canadian Maple Leaf gold and silver bullion coins.

However, it also produces a range of special edition coins for investors and collectors. Among this year’s unusual editions are a range of Batman v Superman: Dawn of Justice coins that were created as a tie-in with the new Hollywood movie. It has also enjoyed strong sales this year of its limited edition Call of the Wild series which features Canadian wildlife.

Collecting coins is a popular way to begin investing in gold. As well as the intrinsic value of the precious metal in the coins, by choosing limited edition runs, collectors can also add value to their investment through the rarity value of the coins.