February was a static month for gold and silver prices, with the price in ounces only slightly moving either way throughout the shortest month of the year. Prices were boosted by the struggling US Dollar and the continued Brexit Effect on the Pound, as well as elections in Germany and Italy destabilising the Euro, but looming interest rate rises reigned in any attempt by bullion to pull away with a price rise.
Gold Prices (per oz):
GBP: Feb 1st = £945.78, Peak = £966.15, Low = £937.23, Feb 28th = £957.99
USD: Feb 1st = $1343.15, Peak = $1355.24, Low = $1311.32, Feb 28th = $1318.68
EUR: Feb 1st = €1081.71, Peak = €1090.04, Low = €1068.71, Feb 28th = €1081.40
Meetings held by the Bank of England and the Federal Reserve respectively all but confirmed that interest rate rises are imminent, with the first of three or four rises in 2018 expected in May. The news was enough to give the fiat currencies a boost to counter their ongoing fragility and the threat of inflation.
In the US, inflation caused by economic demand has impacted upon the value of the Dollar. Interestingly, this would appear to be a welcome weakness in USD as part of the Trump administration’s attempts to fix the trade deficit. At present, the US imports far more than it exports, and in response the US has instated trade tariffs on imported washing machines, solar panels, steel and aluminium. The risk is that China and other major nations will retaliate with tariffs of their own on imports from the US, because while a weak Dollar is fine by the US, they need the same or more exports to help redress the trade balance. A trade war scuppers this idea, which in turn risks Trump’s infrastructure overhaul because the demands of this project are a large part of the cause for inflation in the US.
For the UK, the threat of inflation – currently at 3% - and the success of the last interest rate rise in November 2017 meant the Bank of England was fully on board with future rate rises and confident in the British economy to cope with further rises. Brexit was on the menu once more, with Jeremy Corbyn and Dr Liam Fox clashing in separate speeches about the EU Customs Union. Labour have softened their stance, conceding they would be happy to be in a customs union but not the current one, while Fox stated that the Conservatives wholly opposed any sort of union over fears it would limit global trade opportunities and thus impact UK jobs. Regardless of who is right, the price of the Pound was falling swiftly on the day of Corbyn’s speech until his appearance at Coventry University, suggesting that the softer Brexit approach may be more appealing to investors and businesses.
Silver Prices (per oz):
GBP: Feb 1st = £12.18, Peak = £12.18, Low = £11.67, Feb 28th = £11.92
USD: Feb 1st = $17.29, Peak = $17.64, Low = $16.26, Feb 28th = $16.40
EUR: Feb 1st = €13.92, Peak = €13.92, Low = €13.29, Feb 28th = €13.45
In other news, February started in an explosive fashion with the US Government fining both Deutsche Bank and UBS a combined total of $45 million for ‘spoofing’ the gold market. The trick involves placing fake orders and quickly cancelling, with the aim of making the market look busier and manipulating prices as a result. These incidents are very rare, and only three people had been convicted before this incident and the nine arrested.
The US kept up its knack of being at the heart of big news a few days later, with a record stock market fall on the Dow Jones – dropping 1500 points at its worst point and ending 1175 down from the start of the day’s trading. The losses involved totalled around $4 trillion across the globe, though many analysts and experts considered this not a real loss and said in reality it was ‘a market correction’.
There was a brief drop in price for Platinum as the German courts ruled that cities in the European nation could legally ban older diesel vehicles from their streets in order to combat pollution. The move followed environmental protests and campaigning in the wake of the Volkswagen false emissions scandal in 2015 and is already on the cards in other cities such as Copenhagen, Paris, Madrid and Athens.
To cap off a quiet month for gold and silver prices, the London Bullion Market Association (LBMA) released its 2018 forecast… which was indecisive about where prices would go this year. Some experts said they would rise strongly, while others suggested more slow gains over a long-term period. Either way, something is going to happen!
