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ABC Bullion

Precious metals make strong recovery amidst housing price fall

29 July 2022

In this week's market report:
  • Precious metals market makes a strong recovery  
  • The national median house price has fallen for the first time in 2 years 
  • The ECB’s ambitious new strategy  

Dear Investor,

US Dollar Gold Price

Source: Trading View
(Click to enlarge)

Australian market makes valiant recovery  

The Australian share market is set to open higher to close the week as Wall Street pushes towards a 7-Week high, defying their worrying GDP figures.  
Closing Thursday afternoon, the S&P/ASX200 gaining 0.97% (66.5 points) to 6,889.70, setting a new 20 day high. Investors are beginning to gain confidence as the ASX recovers, over the last 5 days, the index gaining 1.4%. 

Gold hits 3-week high: Despite a tough month for gold, dropping to as low as 1682.70, it has gathered strength as it ends the month at 1724.64, rising 2.12 per cent this week  

Silver back in the fight: The silver spot price has increased by 5.82% to come to $19.92 USD contradicting last week’s pattern of decline. 
Platinum up: Platinum makes it grand return following lows last week, rising by 1.37% to $888 USD 

Palladium stays up from earlier high: Palladium continues its rapid increases in price, rising by 10.51% to $2,087.  

Housing price falls for the first time in two years 

According to Domain, Australia’s median house price has sunk – doing so for the first time in two years. Prices fell by 2.7 per cent in Sydney and 0.9 per cent in Melbourne.  
This fall brings the national median house price to $1.065 million, which stands as $10,000 less than what it was in March, but still $100,000 more than it was this time last year.  
Domain’s Chief of Research and Economics, Dr Nicola Powell, provides some clarity on this shift, 
“What we’re seeing is a slowdown, led by Sydney and Melbourne, and that loss of momentum is spreading geographically … spreading to markets that were once very strong... The other capitals may be rising, but that rate of growth we were seeing has pulled right back.” 

Source: Domain, powered by APM
(Click to enlarge)

Source: Domain House Price Report, June quarter, 2022. Stratified median house price.
(Click to enlarge)

European Central Bank announces ambitious new strategy  

Following its interest rate hike last week, the European Central Bank has announced an ambitious new strategy, the Transmission Protection Instrument (TPI). The TPI allows the ECB to purchase member states’ bonds; in the context of rising interest rates, it appears to fit into a two-fold strategy of increasing interest rates to drive down inflation and financing indebted countries by buying their bonds. Despite concerns about how this reflects each member states and the widely varying consequences it will have, the TPI could prove to be a uniquely effective strategy, if implemented and practiced properly. 
According to the European Council on Foreign Relations
“The move was a reminder that the ECB is fighting record inflation of 8.6 per cent in the euro zone. The European Union now needs to do everything it can to avoid a repeat of the disputes over monetary policy that divided northern and southern member states in the past. 
The EU went through some difficult years during the European debt crisis. Many member states – especially, but not exclusively, those in southern Europe – saw their public debt rise unsustainably after governments bailed out the banking sector. This led to a rise in interest rates for financing the resulting debt and in capital flight to relative safe havens in northern Europe, especially Germany. A combination of the European Commission, the International Monetary Fund, and the ECB oversaw emergency packages that required some member states to enact drastic fiscal reforms. Germany, with the euro zone’s largest economy and as the biggest creditor of the emergency packages, pushed for these austerity policies.” 

Inside our office this week...

As the gold price begins its recovery, our beautiful Minted Bar range becomes attractive for both personal investment and gifts.
From one end of the range, the 100g tablet sits just over $8,000, making it a perfect addition to an individual bullion portfolio. Whilst on the other end and currently sitting at just under $500, the 5g tablets prove to be a perfect gift for friends and family to grow wealth over time.  
Warm regards,
The ABC Bullion Team