Gold Market Report

Gold is caught between worries over inflation and expectations of reduced economic stimulus, explains David Brough.

Gold prices are between a rock and a hard place. Bullion’s appeal as protection against inflation buoys the prices, but they are under pressure from expectations that monetary authorities will soon reduce stimulus packages implemented to support economies during the pandemic.

Gold prices fell in mid-October after surprisingly positive United States September retail sales data, which boosted share prices and fed sentiment that interest rates would rise again from rock bottom levels sooner than previously thought.

At the time of going to press, bitcoin as well as shares had jumped, reducing the appeal of gold as an alternative asset class. Spot gold was down 1.5 per cent to $1,768.38 per ounce on 15th October.

However, gold prices lifted in reaction to nagging inflationary fears around the world, including in the UK, as supply chain shortages dragged on economic growth. An increase in consumer prices in the United States, the world’s biggest economy, also supported gold prices, but figures on 14th October showed US producer prices posted their smallest gain in nine months in September.

US consumer inflation rose solidly in September, driven by increases in prices of food, rent and other goods, according to data on 13th October.

“The higher inflation is allowed to rise, the ever-greater the loss of buying power of the domestic currency,” wrote Lawrie Williams, gold price commentator with London bullion dealer Sharps Pixley.

“This will, in turn, lead those looking to protect whatever wealth they may have to turn to tried and tested safe havens like gold.”

Jeff Christian of New York-based precious metals consultancy CPM Group said that while gold was a protection against what he called “catastrophic” inflation, it did not react in lockstep to gnawing inflationary trends, up one or two per cent, and so on.

While gold is seen as an inflation hedge, reduced monetary stimulus – including expectations that US interest rate rises may come earlier than previously expected – pushed government bond yields higher in mid-October, raising the opportunity cost of holding bullion, which bears no yield. Some analysts believe gold is undervalued because US monetary authorities have been signalling that inflationary pressures are transitory. Evidence of more prolonged ongoing price pressures may spur more gold buying. Some analysts are sceptical that inflation will be short-lived.

Currency impact

The pound hit a two-week peak in midOctober, underpinned by receding fears of a trade war between the European Union and the UK, and on growing sentiment that the Bank of England could move to raise interest rates from their current historic lows earlier than previously thought, possibly as soon as this year.

Previously, many analysts had predicted the UK central bank would not raise rates before late next year at the earliest.

A firmer pound makes purchases of dollardenominated gold cheaper to UK-based gold jewellery manufacturers.

Currency markets are focusing on whether expectations of a possible UK rate hike later this year are premature, with some analysts sensing it may still be too soon to risk destabilising the economic recovery as pandemic restrictions ease.

If trade tensions between the UK and EU do pick up again, further gains by sterling against the dollar may be limited.

In September, just ahead of the CIBJO Congress, the CIBJO Precious Metals Commission, headed by Huw Daniel, released its Special Report, which reviews the year in the gold, platinum, palladium and silver markets and looks at how they fared in a world economy in the shadow of a pandemic.

In general, all four precious metal markets experienced robust sales, with prices rebounding from their lows during the disruptive turmoil of 2020. “In many ways, the pandemic has simply accentuated the roles these metals have always played in providing a safe haven to investors,” Mr. Daniel wrote.

A clear factor in creating robust market conditions was the strong recovery in jewellery demand, innovation in the development of new products and the savvy use of social media marketing.

To see the report, visit

www.cibjo.org/congress2021/specialreports/

Amore experiences a modern-day Gold Rush

Founder and designer of Amore, Barry Mislin, celebrates a welcome rise in the popularity of the yellow precious metal.

Gold rushes were typically marked by a buoyant free-for-all feeling and while I can’t quite claim chaos, I really haven’t experienced anything like this for 30 years. Amore traditionally supplies the middle price sector to independent jewellers and thankfully we’ve seen a renewed appetite for gold jewellery.

The Amore sales team covers all UK and Ireland – all face-to-face meetings save a couple of successful Zoom calls, and we’ve experienced an incredible four-month trading period since going back out on the road. The success could be due to a combination of factors creating the perfect storm.

We’ve seen many stores move away from fashion silver brands and reinvest in gold jewellery. Consumers have money in their pockets, fuelling the emotional aspect of a purchase, and this has been heightened by the pandemic. Most importantly, Amore has continued to invest in its gold offering over the past few years, when many other suppliers moved away from jewellery to engagement and wedding rings instead.

These factors coming together, plus our beautiful collection fitting the retailers’ requirements for unique, modern jewellery, has created the perfect opportunity for us to enhance the partnerships we have with so many independents and allowed us to open many new accounts with more upmarket retailers on the eternal search for something different.

Amore is a family run jewellery company established 22 years ago with the sole intention to inspire independents so they could stand apart from their multiple competitors with innovative, modern designs. We’ve been recognised for unique designing, quality of product, together with a friendly sales team and back office offering traditional, old-fashioned service.

The sales team hear such amazing feedback from retailers who say, “why haven’t I dealt with you before?” They love the essence of Amore and the exacting standards we strive to achieve.

Amore’s passion and expression of design has deepened over the years and our partners’ desire for innovation has given us the belief we’re on the right path. When we sit down with the buyer, they love the Amore ethos of in-house design creating pieces with a difference, total flexibility, quality and style… but above all very saleable jewellery. My inspiration comes from nature and past creations. I love to take these ideas, tweak them, give them the Amore modern twist to update them and produce jewellery that evokes joy and happiness, and I hope that the consumer will love to wear them and experience the same passion I created them with.

The flexibility of the gold collection comes with over 4,000 options all available to order in 9 or 18ct, yellow, white or rose gold and numerous diamond and gemstone combinations. Suites are popular and we offer matching earrings, pendants, rings, bracelets and bangles with RRP price points £75 to £2,000.

While some silver brands are disappearing, that isn’t the case for Amore Argento - Love Silver. I established the brand eight years ago and we have over 200 stockists. I believe its continued success is because it’s not a fashion brand with a short shelf life, and it offers the perfect alternative to a similar expensive piece in gold.

The inspiration to create Amore Argento came from many decades of in-house designing of gold jewellery and realising that I wanted to produce a collection of ‘timeless classic’ silver jewellery with quality, luxury and affordability at the heart of each design. Simply, I have a passion for vibrant coloured gemstones and creating contemporary silver jewellery that people love to wear. Amore Argento can be displayed with powerful point of sale and comes with striking packaging, and we offer training support for staff, quality imagery and help with web and media.

New lines are created and integrated every year to enhance the collections of earrings, pendants, rings, bracelets and bangles. The introduction of larimar, malachite and jade this year have been very popular as they have distinctive properties and powers. Amore Argento is the go-to brand for consumers who love wearing distinctively modern gem set quality silver jewellery. Our versatile and gorgeous collection of birthstone jewellery is also the perfect gift for all life’s amazing moments, with prices between £25 and £350.

Every piece of silver jewellery comes presented in the striking Amore boxes and gift packaging, with a branded heart-shaped polishing cloth and care card.

To discuss becoming a stockist call

01923 777577