January Gold News 2020

The latest statistics from the World Gold Council (WGC) have revealed that gold purchases for national reserves totalled 650.3 tonnes – 1% less than demand for physical gold in 2018 (656.2 tonnes).

Despite the narrow miss of the 2018 total, 2019’s figures still make it the second highest year in the last 50 for gold bullion demand from central banks.

The Eurozone reported weak growth of just 0.1% for the final quarter of 2019 earlier today, with the regional economy hit by economic shrinkage in major players France and Italy. It is expected that Germany too will join in with negative GDP figures when it publishes its data next month.

The Bank of England announced today that it would not be cutting interest rates from the current 0.75%.

The ongoing global economic slowdown, exacerbated by Brexit uncertainty and the US/China trade war, has impacted the forecast GDP growth in 2020 however, cutting a third off the predicted rate from 1.2% economic growth to just 0.8%.

The state of New South Wales in Australia is experiencing a 100-year low for rainfall – for the second year running. The damage of drought in the region is having a knock-on effect on gold mining, with Newcrest Mining warning of a likely drop in gold production in the state.

Global stock markets have been hit by the latest coronavirus fears, which based on the latest figures has left 81 dead and over 2,800 people confirmed ill.

Coronaviruses are not a new phenomenon, but this is a new strain, and scientists aren’t certain of its incubation period, how quickly it can spread, or how severely it impacts people. 

The United States Federal Reserve has added $90.8 billion this week into financial markets, in order to allow institutions to continue lending to the repo market whilst maintaining their legally required reserves.

According to the Wall Street Journal, the Fed balance sheet is $380 billion greater now - $4.18 trillion – than the $3.8 trillion level in September when a lending shortage in the repo market first came to light.

The World Gold Council (WGC) published its 2020 forecast on Wednesday, with few surprises in their predictions for gold’s movement this year.

Continuing from its success in 2019, palladium is experiencing another market value surge – rising to $2,539.14 per ounce on Friday to record its best week since 2001 and the biggest one-day price rise since 2008.

The precious metal pushed on further this morning, setting a new all-time record of $2,580.50 at 8:38am UK time, before settling back to the current price of $2,557.00.

A Sovereign coin depicting Edward VIII, uncle of Her Majesty Queen Elizabeth II, has been sold to a private buyer in the UK for a record £1 million for a coin.

The 22 carat coin was discovered by the Royal Mint’s verification team, who found it to be owned by an American collector who was looking to sell the coin on.

In 2019 it felt like silver was the forgotten metal. The reality though, is that silver is not a bad investment - far from it. Statistically, silver actually gained 16.83% in value for 2019; rising from $15.44 to $18.04 per ounce.

This is hardly a failure to attract demand and puts it ahead of gold in terms of price growth, meaning that in what was a stellar year for it, gold was actually the worst performing of the big four precious metals.

The Pound is at a two-week low and is once again under pressure, following the release of poor retail and GDP figures for the final months of 2019.

Figures for GDP showed the UK economy contracted by 0.3% in November, putting the end of 2019 overall at near-stagnation of 0.1%.

2019 was a very strong year for both gold demand and the gold price. Domestic events drove currency shifts and subsequent asset value changes just as much as international matters. For the UK, Brexit fears drove the Pound down and the general election pushed it back up - both impacting the gold price.

In 2020, the US will have a presidential election, with President Trump contesting this while trying to contain Iran, North Korea, manage the trade war against China, and keep America above the pack as the global economic slowdown gains momentum. Will gold continue its bull run, or can Trump live up to his own hype and resolve all disputes?

Gold was amongst a raft of assets and markets to be impacted overnight as Iran took action against the United States by launching a missile barrage across the border into neighbouring Iraq, targeting a US airbase associated with the killing of Major-General Qasem Soleimani.

The price of gold reached a near seven-year high in US Dollars of $1,586.97 per ounce today, with tensions growing between the United States and Iran following last week's assassination of Iranian general Qasem Soleimani - Iran's highest ranked official behind Supreme Leader Ali Khamenei and President Hassan Rouhani.

Gold has risen by over 4% in the past week against the US Dollar, the Euro, and the Pound Sterling, and with no sign of tensions subsiding, experts believe that safe havens like gold will continue to gain value.

The gold price has surged overnight following news that a US air strike has killed top Iranian general – Qasem Soleimani – in a move that has significantly heightened tensions in the Middle East.

Investors have flocked to safe havens gold and silver as fears of new military conflict grow, pushing the gold price up by 2.9% in 24 hours in Sterling.

It’s been a tough start to 2020 for Sterling, with the UK currency shedding 0.6% as traders return to London today and kick off a new calendar year.

This has resulted in a new-year boost for gold of 1.52% in Sterling versus a more modest rise of 0.68% in Dollars for the same 24 hour period.