Gold prices rally as Federal Reserve maintains interest rates, silver shortages spark investment upsurge, and China National Gold Group Co joins World Gold Council.
Gold price rises in response to US Federal Reserve interest rate announcement
The US Federal Reserve has announced that it will not be raising interest rates. The statement sparked relief among gold investors, who feared that a rise in interest rates would hit the price of gold hard. With no interest rate increase in the immediate future, the perceived risk to gold in the markets is reduced. And in turn, the gold price rose to $1,131 per ounce immediately after the statement, up from $1,110 per ounce beforehand. An interest rate increase is still expected, but not before the end of the year.
China National Gold Group Co. joins World Gold Council
As Chinese gold production continues to expand, the first Chinese member joined the World Gold Council (WGC) this month. China National Gold Group Corporation joins 17 other WGC members representing the world’s gold production industry.
China has increased its gold production by 700% in the past 30 years, responding to increased consumer demand and easy access to gold within the country. Gold trading through the Shanghai Gold Exchange began in 2002, and has helped China draw level with India as one of the world’s biggest gold buyers. The WGC predicts that China’s consumption of gold bullion will increase 20% by the end of 2017.
Experts forecast an upsurge in silver investment
This winter may see an increase in silver investment, experts believe. Winter 2015 could see an upswing in silver’s value, as investors turn to physical assets in response to a shaky stock market. Given the economic conditions, the currently low price of silver, and the limitation in availability due to a downturn in mining activity – all the conditions are favourable for a silver rush.
Indeed, sales of silver are being rationed by mints in Canada and the USA due to a supply squeeze and unprecedented levels of demand. Record sales have prompted mint officials to step up production and limit availability, leading to a positive feedback loop of interest from investors. As silver coinage is perceived to be in short supply, global demand has risen in response. The surge in demand reflects the number of investors who are looking to own physical silver coins to hedge against volatility.
Gold futures reach 5-week high
The penultimate week of September saw gold futures hit their highest point in over a month, with December futures topping $1,150 per ounce on Comex. This is the highest price since August 21. The boost may be due to an increase in ‘safe haven’ trade as the US dollar weakened and the stock market plunged.
Smaller gold bars gain popularity in Asia
Asian markets are seeing increased demand for 100g gold bars, rather than the 1kg bars which are usually traded in the region. It’s thought that current prices are drawing interest from new investors looking to trade in smaller amounts. Those who haven’t invested in gold before are now more interested in using it as a store of wealth.