August 2021 Market Roundup

The gold price experienced a ‘flash crash’ at the beginning of August, falling by 5% in the week leading to Wednesday 11th. The temporary price dip provided individual investors with an opportunity to buy at a lower price, resulting in a 96% increase in demand for bullion coins, bars and DigiGold from The Royal Mint.  It did not take long for the gold price to recover however, rising by over 4% in the week that followed amidst growing concerns around COVID-19 variants and in anticipation of the impending Federal Reserve meeting.  During his Jackson Hole speech on 27th August, Fed Chair, Jerome Powell, gave a dovish outlook for monetary policy leaving many analysts questioning whether a sudden rise in COVID-19 cases in the US might encourage the Federal Reserve to defer plans for tapering monetary stimulus. Before the end of the month, the gold price breached the $1,800 barrier again.

Global Market Trends

In August, the World Gold Council released their Q2 Gold Trends report, which outlined a positive trend for gold coin and bar demand globally. The report described a fourth consecutive quarter of year-on-year gains for physical bullion, with 243.8 tonnes purchased over the three-month period. In addition, it revealed that central banks continued to buy gold throughout the quarter and that demand for gold jewellery was up by 60% year-on-year - although still below its five-year average.

 

 

Developments for Silver

A report by the Silver Institute outlined new industrial uses for silver that could result in increased future demand for the metal. It suggested that silver could be used to replace more rare and expensive metals - such as indium - used in touch screens and other electronic devices. The report also went on to detail other emerging applications for the white metal, including a newly developed sticker test for Cystic Fibrosis using silver chlorinate, and an anti-bacterial silver-impregnated plastic foil used to cover high-touch hospital surfaces.

Looking Ahead

Many gold price analysts are awaiting the outcome of the September Federal Reserve monetary policy meeting to gauge future gold price movements. A hike in interest rates could limit gold price rises although there are many other factors that continue to support the precious metal; including persistent concerns around emerging COVID-19 variants, a slower than anticipated economic recovery and ongoing geopolitical tensions.

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