July 2015 Bullion News

July 2015 Review

China shocks by revealing bullion reserves, 4,7 tonnes of gold sold in just 2 mins, gold price drops as dollar strengthens and as gold dips, silver surges.

China shocks by revealing its bullion reserves

The Central Bank of China has shocked many experts by revealing its Bullion reserves stand at just 1,658 tonnes. This is much lower than many gold experts and investors anticipated. Although holdings have risen 60% since 2009, gold still makes up very little of China’s $3.7trillion foreign exchange reserves.

4.7 tonnes of gold sold in just 2 minutes

Investors were stunned as the Shanghai Gold Exchange (SGE) saw 4.7 tonnes of gold sell in just 2 minutes. This market normally sees around 25 tonnes traded in an entire day. The August 15 Comex gold contract also saw 7,600 contracts traded in the same 2-minute window.

Gold price drops as the dollar strengthens

As the US Federal Reserve prepares to tighten its monetary policy, spot gold prices dropped by 4%, and trading fell to a 5-year low as the dollar strengthened. Investors have been selling gold in anticipation that the Federal Reserve will soon raise interest rates for the first time in nearly a decade, a theory backed up by Federal Reserve chairwoman Janet Yellen who reiterated the central bank’s plans to raise rates at some point this year.

As gold dips, silver surges

Despite lower gold prices, silver prices have been growing. According to the Silver Institute, demand for jewellery and key industrial applications has picked up considerably.

Further to this, data compiled by the Gems & Jewellery Export Promotion Council (GJEPC) shows India’s silver jewellery exports rose by 55% to $523.13 million between April and June 2015 compared to $337.46 million in the same quarter the previous year.

Overall, the global silver market is set to show a physical supply deficit of 1,788 tons in 2015. If this estimate turns out to be accurate, then experts predict a significant uplift in the cost of silver, as demand could outstrip supply.

World Gold Council releases hallmarking system

The World Gold Council has released a report on India’s gold hallmarking model. It’s estimated that India suffers from 10-15% gold leakage due to overvalued or under-carated purchases. The report recommends six key actions to improve the efficiency and effectiveness of the current system, including:

  • strengthening governance around hallmarking processes
  • driving customer awareness of hallmarking
  • potentially developing an Asian alternative to the International Hallmarking Convention

The report also recommended that hallmarking should be made mandatory and recommends a transition to a manufacture-driven system which would help consolidate standards for the jewellery-manufacturing industry.