- 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% |
Click here to download Physical Gold Monthly Report.