Gold Bullion Market Update – July 2017

Market update

July has been a month of upheaval for the price of gold. After prices held steady in the gold bullion market in the days following the ‘accidental’ sale of 1.8 million ounces of gold on 26th June, the price later dropped to £937.54 on 11th July – the lowest price we’ve seen all year.

The pure gold price dip followed the announcement of stronger than expected jobs data for the United States, which saw the dollar rise amidst the increased probability of another US interest rate hike.

It wasn’t long before the pure gold price began to climb again, however, rising steadily from the 17th, as the dollar fell amid concerns in the US.

“The Senate’s failure to repeal Obamacare has amplified concerns that the Trump economic agenda will be more difficult to implement even though the GOP holds a tenuous majority in congress,” Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York, told Reuters.

Wong continued: “That is pressuring US yields and driving the dollar towards year-long lows which creates a positive environment for gold, which has rallied steadily.”

Gold prices were boosted throughout the rest of July by a struggling dollar and US economic data that has caused much speculation as to whether the Federal Reserve still intend to raise interest rates again this year.

LBMA Clearing Statistics published for June 2017

The London Bullion Market Association (LBMA) published clearing statistics for June on 28th July. These figures comprise of daily averages for the month and represent the transfers between the five members of London Precious Metals Clearing Limited (LPMCL).

  • Average price of gold: $1,260/oz, an increase of 1.2 per cent on the previous month
  • Average volume of ounces transferred: 21.0 million, an increase of 1.3 per cent on the previous month
  • Average value transferred: $26.5 billion, an increase of 2.5 per cent on the previous month
  • Number of transfers: 2,811, a decrease of 3.4 per cent on the previous month
  • Average settlement per transfer: 7,476 ounces, an increase of 5 per cent on the previous month  

Industry news

The London Metal Exchange (LME) introduced exchange-traded and centrally cleared precious metals products to the London market on 10th July.

The initiative, named LMEprecious, was developed by the LME, the World Gold Council and six leading industry participants and comprises spot, daily and monthly futures contracts for gold and silver.

Envisioned to support ongoing changes in regulations and enable greater market transparency, these contracts were designed to provide additional sturdiness to the precious metals market.

The LME reported surges during the first week of trading, with LME Gold trading 25,590 lots (79.6 tonnes).

Kate Eged, Head of Precious Metals at the LME, said: “This promising start for our gold and silver contracts is indicative of the strength of the industry support for LMEprecious, which was designed to provide a solution for the London market faced with challenges such as ongoing regulatory change, increased regulatory capital and transparency requirements, and the overall push for modernisation.”

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