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February 2016 Review

Gold price rises by over 24% in early 2016

The gold price reached its 2016 high in February, prompted by falls in oil prices and safe haven trading. As charted below, between the end of 2015 and the end of February, the gold price rose by over 24%, and the silver price rose by over 14%. Meanwhile, equity values fell by 2.3% (FTSE100) and 5.2% (Dow Jones Industrial Average), and the Pound lost 6% of its value against the US Dollar.

gold price silver price vs ftse100 and dow jones

Chart detailing the gold & silver price, measured against the FTSE100, Dow Jones and £/$ ratio – click to enlarge

These movements provide an illustration of why many market commentators, including the World Gold Council, recommend that holding up to 10% of an investment portfolio can protect and enhance performance.

Investors seeking to buy, hold and sell gold as part of their portfolio can do so through our range of products at Royal Mint Bullion, including Signature Gold which carries a premium of just 0.5%.

Brexit concern causes UK gold rush

Talk of a possible British exit from the European Union, coupled with the falling price of oil has sparked a sharp increase in the number of UK investors looking to invest in what is traditionally seen as a safe haven asset. Investors often turn to gold in terms of market uncertainty and economic instability, and the upcoming EU referendum, coupled with the possible effects on commodities and markets are contributing to this.

World Gold Council releases latest Gold Demand Trends Report

The World Gold Council released its Gold Demand Trends report for 2015. The report suggested that annual gold demand was little changed in 2015, just 14 tonnes down from 2014. The first half of the year was challenging and demand was comparatively weak, before a convincing recovery in the second half saw demand grow by 6% year-on-year. They also suggested that consumer demand in India increased by 4% despite flooding and weaker rural incomes. This trend was also seen in the wider market as a 4% growth in global gold demand was recorded year-on-year. The complete demand trend report can be seen on the World Gold Council website here.

Gold miners index reports best performance in 18 years

Due to the recent market turmoil and the resulting demand for gold, the NTSE Arca Gold Miners Index, which includes nearly 40 gold mining companies, reported growth of 38.7% in February – its biggest monthly gain since September 1998. Listed shares in the companies climbed as a result of this announcement, coupled with delayed expectations for the US Federal Reserve interest rates later this year.

Increased demand from Gold’s Biggest consumers

Buyers of gold in Asia and India now represent more than half of consumer demand worldwide. The vast majority of gold which is consumed by China passes through Hong Kong, and reports suggest that gold imports to China have surged over 700% since 2010. Much of the gold which enters China is bought by private citizens who, from 1950 until 2004, were not allowed to own gold.

Scottish village unveiled as new UK goldmine

Following on from reports last year that a company was investigating the possibility of gold exploration in Scotland, it has now been reported that they plan to start mining within the year. Officials from Northern Irish firm GreenOre Gold have acquired a 250 km sq slice of land beside Straiton, in South Ayrshire, Scotland. GreenOre will drill within rock surfaces to find micro deposits in a project that, the company says, could create hundreds of jobs in the area.

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