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November 2023 End of Month Market Roundup

The Royal Mint

Category: Invest

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Precious Metals Prices

During November 2023, the precious metals market witnessed notable price movements. Gold, which started the month at $1982.50, experienced fluctuations, touching a low of $1931.15 on the 13th and reaching a high of $2006.60 on the 21st. Silver opened at $22.670, surged to $23.995 on the 17th, and remained relatively stable, closing at $23.705 on the 24th. These price dynamics were influenced by several factors including sensitivity to real US interest rates, the dollar's performance, robust consumer demand from China and India, and ongoing central bank purchases. Silver exhibited even more positive momentum, rising 1.7% and aiming for $25/oz. Platinum and palladium also showed gains during the period.

The US dollar slipped in November, partly due to steady US business activity but declining private sector employment, perhaps signalling a potential fourth-quarter economic slowdown. The dollar index fell to a 2-1/2 month low of 103.17, reflecting growing expectations that the Federal Reserve might pause interest rate hikes and even consider cutting rates next year [1]. The dollar's weakness benefited precious metals, enhancing their appeal as a hedge against uncertainties.

Looking ahead, factors such as US interest rates, the US dollar's movement, and global economic uncertainty will likely continue to shape the precious metals market in the weeks ahead.

 

Central Banks Continued Golden Appetite.

Central banks across the globe continued to bolster their gold reserves in the third quarter of 2023, amassing a total of 337 metric tons, according to the World Gold Council's (WGC) latest report. This steady central bank activity, though slightly below the record set in Q3 2022, contributed to a record-high of 800 metric tons of gold purchases for the year so far, signalling robust and sustained demand for gold [2]. Central bank purchases have emerged as a key driver of demand, and consistent central bank activity aligns with expectations of another strong year-end total for 2023.

 

India: Golden Opportunities Amidst Wedding Season and Festivals

India's wedding season and festive celebrations are said to be set to create a significant economic impact and influence the demand for gold. An estimated 50,000 weddings are expected in Kolkata and its adjoining areas during this season, a remarkable 35% increase from the previous season [3]. This late-starting wedding season has already seen around 7,000 registered weddings this month, with jewellers experiencing a 15% surge in demand for gold based on pre-wedding shopping [3]. However, Reuters reports suggest that relatively high gold prices have led to a slowdown in wedding season demand in India, resulting in dealers offering steeper discounts [4]. Despite the recent dip, gold imports in India reached a 31-month high in October, increasing by 60% compared to the previous year, driven by lower prices and the festive season, further emphasizing the significance of gold during Indian celebrations [5].

 

AI Reshaping Precious Metals

Artificial intelligence (AI) is ushering in a new era for precious metals, presenting both opportunities and challenges for investors. CFTC Commissioner Christy Goldsmith Romero recently cautioned about the "great promise and great risk" associated with AI in financial markets, highlighting the importance of regulators understanding and monitoring its use in regulated financial services [6]. In addition, Metals Focus predicts a surge in demand for precious metals, including silver, platinum, and palladium, driven by AI's increasing need for advanced chips and electronic components [7]. While AI is said to enhance trading efficiency, it could also contribute to market volatility, as algorithms analyse vast datasets and act on patterns swiftly, leading to herd behaviour and rapid market swings as a result [8]. As AI's influence on commodities trading grows, investors must navigate this evolving landscape to make informed decisions in the precious metals market.

 

Russian Gold Trade and Evasion of Sanctions

The global gold industry is said to be facing a critical challenge as Russia increasingly utilises gold to circumvent sanctions with the UK's National Crime Agency (NCA) recently issuing a red alert warning about efforts to launder sanctioned Russian gold [9]. Russian gold is shipped to other countries, where it is melted down to erase its origin, providing revenue for Russia as a result. Despite sanctions, according to The Telegraph, UAE imports of Russian gold surged 15-fold between 2021 and 2022 [10].

 

The Royal Mint introduces The Britannia to Japan

The Royal Mint has established an official partnership with Nihon Material Co., Ltd, an accredited LBMA and LPPM member in Japan, to expand the precious metal trade between the UK and Japan. Starting from November 20, 2023, Nihon Material Co. will introduce The Britannia, renowned as the world's most visually secure bullion coin, to the Japanese market. This coin offers four distinct visual security features that enable easy authentication when rotated in the light. The collaboration aims to promote environmental and social governance, with a focus on reducing carbon footprints. The Britannia, known for its iconic design representing British values, will be available in gold and silver, featuring the official coinage portrait of His Majesty King Charles III [11].

 

References:

  1. https://www.reuters.com/markets/currencies/dollar-defensive-markets-weigh-us-rates-outlook-2023-11-24/
  2. https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-q3-2023
  3. https://timesofindia.indiatimes.com/city/kolkata/big-fat-wedding-season-in-kolkata/articleshow/105429806.cms
  4. https://www.reuters.com/markets/commodities/asia-gold-indian-dealers-widen-discounts-wedding-season-demand-slows-2023-11-24/
  5. https://www.omanobserver.om/article/1145888/business/economy/indias-oct-gold-imports-hit-31-month-high-on-festival-boost
  6. https://decrypt.co/206378/artificial-intelligence-in-financial-markets-regulation
  7. https://oilprice.com/Metals/Gold/AI-Surge-To-Fuel-Precious-Metals-Demand-In-2024.html
  8. https://www.standard.co.uk/business/ai-commodities-trading-hedge-funds-b1122707.html
  9. https://nationalcrimeagency.gov.uk/news/nca-warns-of-abuse-of-gold-to-evade-sanctions
  10. https://www.telegraph.co.uk/business/2023/11/11/untraceable-russia-gold-sanctions-funding-putin-war/
  11. https://www.royalmint.com/aboutus/press-centre/the-royal-mint-and-nihon-material-co.-ltd-forge-new-precious-metal-trade-relationship-between-the-uk-and-japan/

 

The contents of this article, accurate at the time of publishing, are for general information purposes only, and do not constitute investment, pensions, legal, tax or any other advice. Before making any investment or financial decision, you may wish to seek advice from your financial, pensions, legal, tax and/or accounting advisors. 

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