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Physical Gold Monthly Report | October

  • Gold suffered in September as investors appeared to flock to the US dollar
  • Gold-backed exchange traded products saw $56bn of net inflows in September, making it the tenth consecutive month of net inflows[1]

 

Performance Review

  • The London Bullion Market Association (LBMA) PM gold price ranged between $1,972.35 per troy ounce on 1st September and $1,833.95 on 29th September.
  • Gold suffered from a strengthening US dollar
  • The Royal Mint Physical Gold ETC Securities AuM, our Gold ETC, hit a new high of $397m on 22nd September.

 

Gold Performance

September  YTD*  12 Month** 
 -3.60% 24.57%  27.04% 

Past performance is no guarantee of future performance. Source: Bloomberg, HANetf *YTD figures based on 01.01.20 - 30.09.20 **12 Month figures based on 31.08.19 -30.09.20

 

What Has Driven This Performance?

A shift in investor sentiment towards the US dollar was the dominant factor impacting the gold price in September, though priced in GBP, gold ended the month at £1,467.63, down just 0.1% from the 1st September’s LBMA PM fix price of £1,469.60.[2]

The weakening of the US dollar over recent months and the surging gold price may have led investors seeking safe-haven assets to conclude that the USD was comparatively cheap. With several factors in September appearing to lend support to the dollar against other major currencies (faltering Brexit negotiations in the UK, rising coronavirus cases in the Eurozone, etc.), it is perhaps understandable that the dollar gained while gold lost ground.

The US dollar was also supported throughout September by a steady trickle of positive US economic data, which weighed on gold. Early in the month, various US unemployment metrics appeared to paint a brighter picture than the market may have been expecting, while positive consumer and manufacturing data came later. At the end of September, the dollar was supported by a weakening Euro, a response to Christine Largarde’s comments that suggested the European Central Bank might change its policy on inflation targeting.[3]

Past performance is no guarantee of future performance Source of gold price data: Bloomberg/HANetf as of 30/09/20

 

The Royal Mint Physical Gold ETC Securities

Total Return NAV to Date (30/09/2020)

 

1M

3M

6M

YTD

12M

Since Inception

The Royal Mint Physical Gold ETC Securities

-3.62%

6.66%

17.15%

19.16%

-

19.16%

London 3pm LBMA Gold

-3.60%

6.72%

17.28%

24.57%

27.04%

19.32%

 

Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. Source: LBMA / HANetf, data as of 01/10/20

 

Industry News

India Enters the Festive Season

Gold jewellery makes up around 50% of gold demand each year, with a substantial portion of that demand arising from China and India. India is the second largest gold jewellery market, and demand is seasonal. As retailers in India prepare to enter the most important quarter for gold jewellery sales (which encompasses Diwali and the wedding season), jewellers are said to be bullish about a rebound in demand following a coronavirus-related fall earlier in the year. The Economic Times reported that a good monsoon (and the first time India has experienced two consecutive good monsoons for decades) has boosted gold jewellery demand in rural India as farmer’s cash-in on a bumper harvest.[4] Rural demand usually accounts for the majority of Indian gold jewellery sales, so this news is thought to be particularly encouraging for the market, and for gold demand, over the next few months.

Central Banks Were Net Sellers of Gold in August

Recently released data analysed by the World Gold Council shows that central banks were net sellers of gold in August. The World Gold Council noted that months of net sales ‘are not unheard of’, and that while 7 central banks bought gold in August, these were outweighed by a single bank, that of Uzbekistan, selling 32 tonnes.[5] The World Gold Council’s Head of Central Banks Relationships also stated in an interview his belief that "the fundamental reasons central banks have been buying gold for the last ten years have not really gone away at all and you have to remember that central banks are still looking to diversify their reserve assets away from the U.S. dollar".[6]

 

Outlook

New developments may be required to re-ignite gold’s bull run, and the market is eagerly awaiting news on a number of issues.

Potential factors that could impact the gold price over the next few months include the possibility of a no-deal Brexit, the impact of a global second-wave of coronavirus cases, the development of a coronavirus vaccine, and the possibility of a contested US election, following comments from Donald Trump in the first presidential election debate.

While investment demand may have been the primary factor in the price rally earlier this year, jewellery demand (around half of all demand) should not be forgotten. Gold jewellery sales in India may help boost gold demand throughout the festive season, which takes us into 2021.

 

Product Details

The Royal Mint Physical Gold ETC Securities (RMAU) is designed to offer investors an effective way to access the gold market as it tracks the spot price of physical gold.  

It is the first financial product to be sponsored by The Royal Mint and the first gold ETC custodied with a European Sovereign Mint.  

The ETC is backed by London Bullion Market Association (LBMA) Good Delivery bars held on a segregated basis.  The gold will be stored and guarded in The Royal Mint's highly secure vault in Llantrisant, Cardiff.  

The value of your investment may go down as well as up and past performance is no indication of future performance. Your capital is at risk.

Exchange Bloomberg CODE RIC ISIN  SEDOL  Currency TER
London Stock Exchange RMAU LN  RMAU.L  XS2115336336  BKT7175  USD  0.22%
London Stock Exchange RMAP LN  RMAP.L  XS2115336336 BKT7197 GBP  0.22%
Deutsche Boerse Xetra RM8U GY  RM8U DE  XS2115336336 BKT71G4 EUR  0.22%
Borsa Italiana RMAU IM RMAU.MI XS2115336336 BKT71B9 EUR 0.22%

 

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