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Can gold maintain 2016s spectacular gains in 2017?

Monday, October 31, 2016

Investors and analysts are now looking ahead to 2017 and asking whether gold will continue with the spectacular gains it has made in 2016.

Sentiment appears to be against the likelihood of a similar year for the precious metal as we’ve seen in 2016, when the price has soared by around 20 per cent. That’s one of gold’s best performances since 1980.

The uncertainties that have pushed up the price of bullion are expected to ease. The dollar is gaining in strength as a result of the weakness of the pound following the UK’s Brexit vote; the US Federal Reserve is now widely forecast to increase US interest rates in December; and Hillary Clinton is pulling ahead of Donald Trump, albeit narrowly, in the race for the White House.

But over the longer term, the yellow metal still has plenty of lustre to attract investors. Although the economic picture may be brightening in the US and the political uncertainty that has dogged the country during this presidential election year appears to be easing, that is not the case everywhere. Globally, many countries are still implementing monetary easing policies leading to a weakening of their currencies. In addition, a number of developed countries’ interest rates are in negative territory. These issues all add to gold’s attraction as a safe haven investment over the longer term.

There is also the factor of fashion. According to the Hindu Business Line, “gold as an investment is back in vogue with surge in demand for gold ETFs (exchanged traded funds), bars and coins. If prices rally, investment demand will only rise further, taking prices higher”.

So, although bullion may not rise at the rapid rate it has done so far this year, gold appears likely to remain an important investment option in the months ahead. But always remember, the gold price can fall as well as increase, and watching the market carefully should be a key part of your investment strategy.

US gold coin sales set to break 2015 sales totals

Tuesday, October 25, 2016

Authorised buyers have purchased a total of 768,000 troy ounces of the US Mint’s flagship 2016 American Eagle gold bullion coins so far this year, according to the latest figures.

The figure is the total of one ounce, half, quarter and one tenth of an ounce versions of the bullion coin, with 24,000 ounces sold in the most recent weekly update. The coin is currently marking its 30th anniversary since its introduction.

Total sales so far for the 2016 American Buffalo one troy ounce gold coins stand at 163,000, with 5,000 purchased in the latest weekly statistics, Coin Update reported.

In what has been a volatile year in the US, with the race for the White House helping to increase the popularity of gold as a safe haven for investors, it looks likely that sales of both types of bullion coin will surpass last year’s figure. In 2015, 801,500 ounces of Gold Eagles and 220,500 ounces of Gold Buffalos were sold.

The Mint sells directly to authorised buyers – or official dealers – who then sell the coins on to the public. The high levels sold this year are evidence of the strong appetite among investors for gold bullion coin collecting.

Gold bullion coin collecting is a popular way to invest in gold. As well as the intrinsic value of the gold contained in the coin, investors are often able to make an additional profit on the rarity of their coins when they come to sell.

As well as gold coins, the US Mint also produces investment coins in silver and platinum. Already this year, the total mintage for coin of all precious metals is ahead of last year, which stood at 212,000.

Figures released by the Mint also showed that 2016 currently has the second-highest production of the highly valuable five ounce America the Beautiful gold coins after 2011, when it made 465,100 pieces.

Market watches trade carefully as dollar gains leave gold price flat

Monday, October 17, 2016

Gold investors will be watching the markets carefully this week after the precious metal ended last week flat following a rise in the value of the US dollar.

There is no market data that is likely to impact on the price of bullion due until the end of the week, when the US Federal Reserve Chair Janet Yellen is due to speak at the Boston Fed economics conference.

There is strong sentiment in the market that the Fed will raise US interest rates before the end of the year, which tends to make gold investments less attractive to investors.

Ronald Leung of Lee Cheong Gold Dealers in Hong Kong told Reuters: “There are a

lot of expectations of a Fed rate hike in December, which will be bearish for gold.”

INTL FCStone analyst Edward Meir added in a note: “We think its (Federal Reserve's) rate hiking trajectory will remain very much intact.

“As a result, the dollar will likely push higher going into year-end, offering gold its most formidable headwind and even countering the impact of weaker equities.”

Mr Leung pointed out that uncertainty – which is good for the price of gold – is likely to continue in the run up to the US Presidential election in November. If Hillary Clinton is victorious, he believes the US currency could rise further and reduce the gold price. However, that is without taking into account any unexpected geopolitical events which may happen in the interim.

A pause in the high prices of gold seen throughout the year would mark a good time to buy, but the price remains strong for those who have held their bullion for some time and are looking to make a profit.

In other precious metals news, silver, platinum and palladium all closed the week down in value.

Gold price rebounds after falling to lowest level since June

Monday, October 10, 2016

Gold jumped back in early trade today (Monday 10 October), following its worst week since June when it lost value in eight consecutive trading session.

Today at 07:45, the precious metal was selling for £1,021.49 per troy ounce, after falling to a low of £989.37 last week.

Analysts said the price was lifted by Chinese buyers returning to the market after the holidays, a weaker dollar and expectations in the market that further increases in interest rates in the US this year will be gradual. 

Richard Xu, of Chinese gold exchange traded fund HuaAn Gold, told Reuters: “Gold prices are quite appealing after the recent correction. In China, what we see today (after a week-long holiday) is that there is some demand to buy gold following its dip.”

The improved prices came after last week’s big jump in the price of the US dollar, which hit its highest levels since the end of last year. When the dollar rises in value, gold tends to lose value and vice versa.

The dollar was up after strong statistics on US manufacturing and employment, which suggested that the cost of borrowing would be increased before the end of the year. Higher interest rates increase the cost of holding gold, which is a non-yielding commodity. 

However, a crash in the value of the pound at the end of last week, which dipped to its lowest level in three decades as traders worried that the UK will go for a ‘hard Brexit’ from the EU, helped to restore some value to the precious metal. 

Investors will be watching the markets, and world events, closely this week to see what direction gold will take. If you’re looking to begin a gold investment, there may be the opportunity to get in at a slightly lower price than has been the norm for much of the year.

Dip in gold price offers opportunity to investors - Gold Bullion

Monday, October 3, 2016

The gold price dipped in early trade today (Monday October 3), as economic turmoil in the markets calmed down.

Investors had been heading to bullion as a safe haven amid concerns about Deutsche Bank, which is negotiating with authorities in the US over the level of its fine after it was found to have mis-sold mortgage-backed securities.

But Jeffrey Halley, senior market analyst at OANDA, told Reuters that “everything seems to have calmed down substantially including Deutsche Bank and OPEC production cuts,” so that gold is less attractive to investors.

On Monday at 09.00, gold was valued at £1,024.11 per troy ounce.

It’s likely that there will be no great rally in the gold price this week, because the biggest buyer – China – will not be involved in trade. The Chinese markets are closed until October 9 for National Day Holidays.

HSBC analyst James Steel said in a note: “We see no major investor enthusiasm for gold and prices may have to ease.

“Gold's best near-term chance of a rally would more likely come from an oil surge or a deterioration of the financial situation in Europe.”

There are currently mixed signs coming from the US which have made it more difficult to call whether the US Federal Reserve will raise interest rates at its next meeting. Although US consumer spending was down, there were also signs that inflation may be picking up.