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What’s next for the gold price as The Royal Mint reports huge rise in demand?

rising demand for gold
Unprecedented demand for precious metals generated record profits for The Royal Mint in the last financial year, prompting speculation around what could follow for the gold price.

As sales of precious metals continue to increase in the UK, US, and Europe, The Royal Mint announced record numbers of investors looking to hedge their portfolios with physical gold, silver and platinum coins and bars to ride out the ongoing economic turmoil.

Traditionally seen as an inflation-proof investment, precious metals accounted for 50% of The Royal Mint’s £18 million pre-tax profits – up £5.6 million on the previous year. Looking at revenue, precious metals made up 86% of its £1.4 billion total revenue during the same period.

The announcement comes as The Royal Mint has evolved into a consumer brand and increased the production of coins and bars to keep pace with demand. At The Gold Bullion Company, our experience, as one of only a handful of Official Partners of The Royal Mint, confirms the rising demand which we’ve seen from our own customers.

Interestingly, The Royal Mint’s chief executive Anne Jessopp said considerably more women and young people were now investing in precious metals. She added: “We have also seen more parents and grandparents gift gold for children, each birthday for example, allowing them to accumulate savings from an early age.”

With demand spiking and a wider range of people showing interest, what could be next for the gold price and the markets?

Keep reading to find out more about some of the drivers behind the increased demand and what this means for the price of gold moving into 2023.

A steady asset amid the storm

Some have questioned gold’s performance in 2022. With inflation at extremely high levels, we haven’t seen the rocket growth in the gold price that historical performance might lead us to expect.

But in comparing gold prices throughout 2022, we see that gold has held a steady value and risen in value gradually – which is more than can be said for other asset classes.

Today, November 7th, gold is priced at £1,465 per troy ounce - up from £1,343 on January 5th.

At the end of September, the price spiked to £1,547. There have been lows too, although the price has never fallen back to the lows it began the year on.

So while we haven’t seen gold rocket up in value, we are seeing it perform true to form as a steady hedge. We saw this to be true in July when we looked back at its performance over the first six months of 2022. And we see it now as the asset ranks as a top performer for the year, beaten only by commodities and the US Dollar.

What’s causing the fluctuations in the price of gold?

Economic, social, and geopolitical events all impact the price of gold.

Just looking back over the past five years, we’ve experienced a relentless slew of events causing economic and political instability – the main culprits being Brexit, the COVID-19 pandemic, and the war in Ukraine. We’re now in the midst of a cost-of-living crisis with recession seeming inevitable as inflation in the UK, US and Europe sits around 9-10%.

As we move towards the end of 2022 and into 2023, gold prices are staying in a tight range predominantly due to a strong US dollar.

With ongoing political turmoil, gold investors expect movement to continue in an upward trend into next year.

Some sense of stability returned to the UK on October 25th after Rishi Sunak became the new Prime Minister – the third in as many months. However, Mr Sunak emphasised the ‘profound economic crisis’ facing the UK, warning that ‘difficult decisions’ lay ahead to get government borrowing and debt back on a sustainable path.

This comes on the heels of the minibudget announced by former Chancellor Kwasi Kwarteng just a few weeks earlier causing financial markets to spiral. This culminated in the news that the Bank of England was forced into emergency bond-buying to prevent havoc and further risk of recession and we saw gold prices rise modestly.

We’ve since seen the pound recover some ground against the dollar in late October and early November, but this is still likely to keep the gold price in sterling under some pressure for the time being while the UK government works to restore credibility to Britain’s finances.

All eyes are on the details of the November 17th budget to assess longer term market confidence.

Gold price predictions for 2022 and 2023

Accurate predictions can be tough during times of volatile financial markets. However, the London Bullion Market Association (LBMA)’s October 18th forecast based on unprecedented demand was cautiously optimistic.

The international trade association sets gold prices for the London gold and silver markets, informed by its global client base, including investors, central banks, mining firms, producers, and refiners. Together they predicted that gold prices would increase from US$1,650 (£1,423) a troy ounce to US$1,830.50 over the next year.

Nicky Shiels @nixsa84 October 19, 2022

Invest in gold with gold coins and gold bars

If you think gold has a part to play in your portfolio over the coming year, start taking a closer look at physical gold bullion today and explore our range of gold bars and gold coins to create a winning portfolio for 2023.

Wondering where to start? Take a look at our range of Gold Britannia coins from The Royal Mint. These fine gold coins were launched in 1987 and are available in a range of different weights to suit your budget.

Are you a seasoned investor or collector looking to diversify your portfolio? Or maybe you’re considering an investment in gold for the first time and looking for guidance.

Whatever your gold purchase requirements, The Gold Bullion Co team is available to provide information and to answer any questions.

Please don’t hesitate to contact us on 01902 623 256 or email us. If you would prefer to visit us in person, you can book an appointment to visit us at our head office in Wolverhampton.

Article Last Updated: Thursday, November 10, 2022