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Updated 14:46 08/05/21

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December Gold News 2015

After months of deliberation the Federal Reserve increased interest rates by 0.25%. This is the first increase in 7 years and could potentially send shockwaves across the financial markets.

Investors worry the rate rise will boost the value of U.S. dollar and increase the borrowing costs for countries with debt denominated in the U.S. dollars. Since the crash of 2008 banks have taken money created by quantitative easing and lent it to emerging market economies and captured the spread.

The rate rise will also increase the cost of borrowing for U.S consumers and could potentially choke of the recovery. With ...

17 Dec 2015, 11:25 a.m.
Peter Walden

In U.S. dollars the gold price has fallen this week ahead of todays Fed interest rate decision.  This week gold was exchanging hands at $1,059.60 per ounce down 1.5% compared to Fridays finish.

After seven years of 0% interest rates, Fed chair Janet Yellen is expected to announce a 0.25% rate hike this afternoon.

Gold and other commodities typically fall as interest rates rise as they become less attractive when compared to income generating assets.

The rate hike is so widely expected should the Fed change course the gold and silver price should surge. The futures market are predicting only ...

17 Dec 2015, 11:25 a.m.
Adam Pike

Prior to the 2008 stock market crash commodity prices plunged as deflationary pressures took hold over the economy. Worryingly, the same is happening right now.

On Thursday the Bloomberg Commodity Index closed at a 16 year low and is down 28% year to date. Mining giants such as Anglo American and Glencore are slashing their work force and cutting dividends to stop their share price collapsing.

The last time commodities were so cheap an economic implosion was just around the corner. 2015 has been a bloodbath for the commodity sector as supply increased and demand weakened. In recent days the ...

15 Dec 2015, 12:34 p.m.
Duncan Richardson

The Federal Reserve is set to raise interest rates on Wednesday for the first time in a decade. If they do, they will be raising rates at the same time the oil price is plummeting and commodity prices are in freefall.

The U.S economy has become addicted to stimulus and cheap money. Should this policy be reversed the U.S. dollar is likely to soar making U.S exports even more expensive. Despite positive jobs data the U.S. labour market is a long way from full employment.  A rate rise will choke off any growth in the U.S economy and paralyse economies ...

14 Dec 2015, 11:10 a.m.
Duncan Richardson

In recent years the mighty dollar has been viewed as the ultimate safe haven asset. When financial assets come under pressure, investors flock back to the U.S. dollar not because the U.S. economy is strong, but because it’s perceived as the lesser of many evils.

However, recent selling by China and Japan suggests the rally may be coming to an abrupt end. In November China sold $87 bn of U.S. treasury’s and since June 2014 have sold have half trillion dollars mostly dominated in U.S. treasury’s. Like China Japan is also reducing its U.S dollar exposure. Last month they sold ...

11 Dec 2015, 2:18 p.m.
Duncan Richardson

Over 44 million American eagle silver coins have been sold in 2015, setting a new record for the amount sold in a calendar year. With the price trading close to a six year low the U.S. Mint expects demand to remain solid for the remainder of the year. Since 2007 demand has increased every year as retail investors seek to protect their wealth.

Sales of the popular Canadian Silver Maple Leaf are also at record levels and are expected to exceed 30 million ounces. In the UK investors favour the Royal Mints 1 oz. Britannia silver coins as it is ...

11 Dec 2015, 2:17 p.m.
Peter Walden

China added a further 21 tonnes of gold to their official reserves in November, as the Central Bank of China took advantage of a falling gold price. This figure is the largest monthly purchase since the Chinese Central Bank started announcing monthly figures in July.

The Peoples Bank of China now owns 1,743.35 tonnes of gold and have the fifth largest central bank hoard. Many doubt China is reporting the correct figures, with many analysts estimating their reserves could be many times higher. China’s gold holdings are of political significance and only disclosure information as and when they want.

Russia ...

8 Dec 2015, 2:23 p.m.
Duncan Richardson

Despite the gold pricing declining over $800 per ounce since August 2011, a number of big players are adding gold bullion to their portfolios.

Ian Stewart, who runs the popular Newton Real Return Fund, believes financial markets are been driven higher by quantitative easing rather than fundamentals. As currencies continue to be debased the fund is holding gold as an insurance policy. Stewart believes inflation could be ignited if central bankers attempt to inflate away the debts that have been built up over the last 30 years.

Personal Assets, Ruffer Investment Capital and RIT Capital all allocate a small percentage ...

7 Dec 2015, 2:18 p.m.
Peter Walden

After vowing to do whatever it takes to save the Eurozone, Mario Draghi, has cut its key deposit rate and extended its QE program.

The overnight deposit rate has been cut from -0.2% to -0.3% and the banks money printing programme has been extended to March 2017.

The reduction in the interest rate paid on deposits held at the ECB is supposed to penalise banks for hoarding cash and encourage them to lend the money into the economy.  The theory being, additional cash circulating in the economy will encourage economic activity.

Markets had been expecting the ECB to take stronger ...

4 Dec 2015, 9:24 a.m.
Adam Pike

The gold price valued in U.S dollars dropped to a six year low on Thursday as investors anticipate a December rate rise. At one point the gold price fell to $1,045.40 per ounce.

Janet Yellen, head of the Federal Reserve said the Fed is likely to increase rates this month citing improvement in the labour market and signs inflation is returning to their 2% target.

Yellen is likely to reaffirm her comments later today when she addresses the Joint Economic Committee. After months of speculation the Fed will finally announce their decision on the 16th of December.

Gold traders will ...

3 Dec 2015, 11:07 a.m.
Adam Pike

Withdrawals from the Chinese Shanghai Gold Exchange (SGE) are at all-time highs.  Furthermore, the rate of withdrawals are accelerating as Chinese consumers take advantage of latest take down of the gold price. Year to date 2,313 tonnes have been withdrawn which equates to 80% of annual total mine production. The SGE is China’s gold trading platform which deals primarily in the trading physical bullion. Typically the withdrawn gold is sold to wholesalers and then onto retailers and consumers.

Withdrawals spiked in the summer with over 60 tonnes leaving the exchange every week. Demand then dropped back to 40-50 tonnes a ...

2 Dec 2015, 11:23 a.m.
Duncan Richardson