LBMA Precious Metals Market Report: Q2 2023

There were, however, other elements in play. Q2 saw a boost to the LBMA gold price, from $1963.10 at the beginning of April, to spend 18 days over $2000 in the ensuing month and a half as concerns about the durability of American regional banks, a key feature of Q1, were replaced by fears that the negotiations to lift the US debt ceiling would fail.

Indeed, the gold price rise, particularly during the first half of April, was so rapid that some predicted it would breach its record level of $2067.15 (6 Aug 2020). In the end, however, $2048.45, achieved on April 13, turned out to be the high point.

Finally, a new US debt ceiling of $31.4tr was agreed at end-May, and in response the gold price began to fade, touching its low point for the year-thus-far of $1899.60 on 29 June, and recording a loss of -2.59% in the quarter, although a gain of +4.21% for 2023's first half.

Fuelled by what many perceived to be ineffective developed world central bank moves, frequently described as being behind the inflationary curve, gold bulls were active through the first half of the year. Despite the fact, that as the World Gold Council reported, official central bank gold reserves turned negative in April, at a more retail level demand remained strong.

For example, as noted by BullionVault, the Chinese Global Times - quoting the former China Gold Association Secretary-General - reported that: “Surging demand worldwide reflects further recognition of the metal’s value as a ‘safe haven’ as the weakening of the US economy and repeated economic and financial crises have undermined other countries’ confidence in the US dollar.”

Equivalently, the annual Gallup survey of asset class ranking in the US noted in June that 26% of respondents had opted for gold, the highest number since that survey began in 2012.

Clearly propelled by broadly the same drivers, the trajectory of the silver price during the quarter was similar to that of gold, although, as is normal, with higher volatility. Silver was down -6.08% in the quarter but up +4.21% in the first half of the year. The highest price for the year-thus-far, $26.025 (Apr 14), was achieved one day after gold’s peak and was the highest price recorded for the metal since 9 March 2022 ($26.175).

The first half of April also witnessed exceptional turnover in both gold and silver. On 6 April, 47.20m oz of gold changed hands, some 32% above the quarter average, at a value of $94.6bn; 46.10m oz ($93.1bn) traded on 14 April. Silver’s big day was 12 April which saw turnover volume of 581.53m oz at a value of $14.6bn.