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September 2023 Market Roundup

Category: Invest

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Precious Metal Prices 

September opened with the gold price at $1944.30 /t oz, a price which has held reasonably steady, despite a brief dip to $1918.35, contrasting the sub-$1900 levels seen towards the end of August. Many are looking towards the US Federal Reserve as economists anticipate a hold on the benchmark interest rate through September's policy meeting. Fed Chair Jerome Powell's recent "higher-for-longer" stance, echoed at the annual banking symposium in August, was said to indicate the potential for another rate hike in the months ahead. However, opposing voices within the Federal Open Market Committee (FOMC) suggest that holding off from further increases may prove a better approach. Meanwhile, silver moved from $24.64 on September 1st to a low of $23.01 by the 7th, and platinum ranged from $976 on the 1st to $903 on the 11th of September, adding further complexity to the precious metals landscape. 


Platinum Shortage Surges in 2023 Amid Strong Demand and Limited Supply 

The World Platinum Investment Council recently suggested in their quarterly review that total demand for the metal is expected to increase by 27% in 2023, despite the total supply being flat – leading to a deficit of over 1 million ounces. This deficit is primarily driven by robust growth in automotive and industrial demand while supply remains restricted. 

The WPIC’s report also mentions the automotive sector to be poised for a 13% increase in demand due to increased vehicle production, coupled with the substitution of platinum for palladium and stricter emissions standards. In addition, industrial demand, particularly in the chemical and glass industries, is forecasted to reach record levels. Moreover, strong investment demand, including ETFs (Exchange Traded Funds), adds to the platinum market's complexity, with a net investment demand predicted for 2023. Meanwhile, total supply remains constrained, with challenges in mine production and declining recycling. These dynamics highlight the growing importance of platinum in various industries and emphasise the investment potential amidst increasing demand and limited supply. 


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Central Bank Sentiment for Gold Remains Positive    

According to recent data from The World Gold Council, Central bank demand for gold in July remained robust, with institutions adding 55 tonnes of gold to their reserves. This was said to reflect a continuation of recent buying trends. This trend is significant for individual investors in the precious metals market as it indicates central banks' confidence in gold's value and can influence the price as a result. Notably, the People's Bank of China led the pack in July, acquiring 23 tonnes of the precious metal and making it the biggest purchaser for the year to date at 126 tonnes.  

China's unwavering appetite for gold is suspected to be part of a broader de-dollarisation strategy, aiming to strengthen the yuan's international credibility and reduce reliance on the U.S. dollar. This aligns with limited alternatives to gold as a hedge against political risks and inflation, making central bank gold demand one of the crucial factors behind gold's resilience as an asset. Despite central bank support, gold prices may continue to face challenges, particularly if global growth remains robust and bond yields stay high, emphasising the significance of central bank demand in the precious metals market. 


Gold Attracts Individual Investors as Central Banks Increase Holdings 

According to recent findings from Business Insider, there is a renewed interest in gold among individual investors. This interest is said to be fuelled by central banks worldwide increasing their gold reserves. Data from JPMorgan reveals that more people are turning to gold for their investment portfolios, reminiscent of a trend last seen in 2012. They suggest that to keep gold on its current upward trajectory, central banks need to continue their gold buying, likely because they are concerned about sanctions or want to diversify away from G7 government bonds. Since 2022, central banks have been steadily amassing gold, with a substantial 228.4-ton increase in Q1 2023. However, there are some uncertainties. For instance, in the second quarter, there was a slowdown in net purchases, which might be linked to issues in Turkey's gold market. Nonetheless, this trend could potentially help align gold prices more closely with real bond yields. It is important to note that central bank actions now play a crucial role in influencing gold prices and are said to have surpassed the impact of gold ETF (Exchange Traded Funds) flows as a key indicator.  


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India's Discounts and China's Premiums in the Gold Market 

India and China are experiencing interesting trends in their gold markets. In China, premiums on gold prices soared during August, with traders reporting levels as high as $55 an ounce over global spot prices, up from $20-$38 the previous week. This surge is attributed to optimism surrounding China's policy measures to bolster its economy, potentially boosting gold demand. In India, dealers are said to be offering discounts of up to $5 an ounce over official domestic prices due to high local rates, slightly up from the previous week's $4 discount. This reflects price sensitivity among buyers. These dynamics highlight the impact of local conditions on gold pricing and demand in these key markets. 


Cloud Seeding with Silver Iodide Makes a Splash 

A recent report from industry association, The Silver Institute suggested that silver is taking centre stage in an unexpected role: cloud seeding. This silver-based technology, with over 50 years of global use, is making a comeback as it's employed to boost rainfall in drought-prone regions like Texas, where it's reported to increase rainfall by about fifteen percent annually. Various U.S. states, including Arizona, Idaho, California, and Colorado, are said to be exploring or conducting cloud seeding programs, and Mexican officials are seeding clouds in five states. China, a leader in cloud seeding, was also reported to have used the technique to manage weather during the Beijing Olympics in 2008. The process involves releasing silver iodide particles into clouds, acting as nuclei for moisture, which then falls as raindrops. While measuring its effectiveness can be challenging, more areas are turning to cloud seeding as a climate change mitigation strategy, making silver iodide a surprising player in environmental solutions. 


The Royal Mint Achieves Record Sales in 'Royal Succession' Auction 

The Royal Mint recently held a special 'Royal Succession Coin Series' auction, achieving over $5.1 million (£4.1 million) in sales. This historic auction featured the last bullion coins struck under Her Late Majesty Queen Elizabeth II and the first bullion coins produced bearing the portrait of His Majesty King Charles III. Fierce bidding resulted in record prices, with the last gold bullion 1oz Britannia under Queen Elizabeth II selling for over 25 times its metal value. All 690 lots sold out, with participation from over 35 countries, highlighting the significance of these coins. The auction emphasized the importance of these historic coins, marking pivotal chapters in British and world history. 


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. 

This article may include references to third-party sources. We do not endorse or guarantee the accuracy of information from external sources, and readers should verify all information independently and use external sources at their own discretion. We are not responsible for any content or consequences arising from such third-party sources

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