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Global Uncertainty Pushes Gold Back into Investment Spotlight

Thursday, December 3, 2015

While last week saw gold price gains on the back of the Turkish take down of a Russian jet and the resulting refocus on geopolitical uncertainty, this week has been a mixed performance from gold prices, with climbs seen early in the week, before things took a downturn from Wednesday (3rd December).

Gold started the week trading at £703.717 per troy ounce at 09:00 Monday morning. By 19:00 that evening, the price had shown some decent gains and stood at £708.907. This held into Tuesday, despite a dip towards the end of the day, but by Wednesday afternoon a downward trend had established itself and the gold price had fallen to £705.810 by 14:00, before dropping further on Thursday to £703.272 at 09:00 and going on to hit a near six-year low.

All Eyes on America

While action in Syria and closer to home continues to play its part, gold has been more affected by activity in the US this week with prices remaining dampened by the growing likelihood of an increase in the US interest rates later this month.

Read more about the impact of US interest rate discussions on gold prices here

It would seem December 15th and the Federal Reserve meeting can't come soon enough for many as gold prices continue to fall. And yet demand for physical gold is remarkably strong at the moment.

We saw figures from the World Gold Council's Q3 Gold Demands Trends Report confirm that gold demand in the three-month period was up by eight per cent year-on-year. Jumps were seen around the world; in fact the US Mint reported that it saw a 185 per cent jump in the number of gold coins sold in November in comparison to October.

Peter Schiff, CEO of Euro Pacific Capital, spoke to CNBC about the growing levels of demand for physical gold:

“The demand is there. It's growing. It's even greater outside the US than domestically.The reality is that there's never been a better time where people should be buying gold than now. Currencies are being intentionally and deliberately debased around the globe, interest rates are at absurdly low levels and likely to stay there for the indefinite future."

Physical Focus

Mr Schiff's comments reaffirm the interest in physical gold as global uncertainty and market rumours abound. If further confirmation was needed we need only look back at the World Gold Council data to see that private individuals are buying record amounts of gold, attracted, as ever, to the precious metal’s reputation as a secure long-term investment.

The council's data regarding demand for gold bars and coins revealed a 33 per cent rise during the three-month period, with UK demand specifically jumping by 67 per cent.

With this week’s vote confirming British airstrikes Syria, turmoil and uncertainty is set to grows in our increasingly global economy. In light of this, investors are focusing back on the first rule of investing: preserve your capital before all else.

And in this environment, where better for investors to turn than to physical gold?

An asset that has provided long-term insurance through thousands of years of conflict and upheaval.