In Depth

Gold price waits for rates clues from Jackson Hole

Political turmoil in the US has the potential to 'help gold in the short and longer term'

Apple Watch: Will it drive up the price of gold?

11 March

Although the gold price fell sharply today, some analysts are predicting that it could soon be on the rise again as Apple stokes demand for the metal with its new gold smartwatch.

The quantity of gold required to build the Apple Watch could have a noticeable impact on global prices, they say. 

According to MoneyMorning.com, the new devices "won't just be the most sought-after gadget of the year", but also "the world's biggest gold price catalyst of 2015".

The most expensive model, called the Watch Edition, will have a case made of 18-carat gold and will be priced from $10,000 to $17,000 (about £8,000 to £13,500 in the UK).

Although Apple has not confirmed how much gold it will use in each watch, analysts have examined the device and made an educated guess. 

Even the most conservative sales projections and estimated raw material requirements suggest production of the device is likely to have an impact on gold prices, MoneyMorning suggests - and less conservative estimates suggest that Apple's consumption could be vast.

"If some of the sales and gold content projections are correct, the gold Apple Watch could soon gobble up nearly a third of the world's gold production," it says. That would constitute 746 tons of the precious metal, making it the third-largest gold consumer in the world, after the whole of China and India. 

Today however, the gold price was heading downwards for a second day: at 4pm GMT it was trading at $1,152.50 per ounce, $7.50 below yesterday's close.

Commenting on yesterday's losses, BullionDesk.com said investors had "sought returns elsewhere", such as in equities and the US dollar. 

This week's trading underlines the fact that if the Apple Watch is to buoy up the gold price, it will have to counter the effect of several factors which are combining to force it down.          

"The outlook for precious metals at present is becoming increasingly gloomy," Commerzbank said. "Gold is facing headwind from the very firm US dollar, higher US bond yields and rising equity markets. Speculative financial investors are also likely to have retreated further from the gold market."

The price of gold sank on Friday after US jobs data was released that was significantly better than expected.

"Given that US rate rises and a strong dollar have been on the agenda a long time, we are surprised by the extent of gold's reaction, especially as the downward spirals in many currencies could well create risks of their own," FastMarkets analyst William Adams told BullionDesk.com.

Recommended

Long working hours cause 745,000 deaths a year, study reveals
Office workers
Business Briefing

Long working hours cause 745,000 deaths a year, study reveals

Bitcoin price crashes after Tesla suspends payments
160112-elon-musk.jpg
Business Briefing

Bitcoin price crashes after Tesla suspends payments

UK economy shows resilience in first quarter
The UK’s construction sector grew by 5.8% in March 2021
Business Briefing

UK economy shows resilience in first quarter

Queen’s Speech: what does it mean for UK business?
Housing planning bill
Business Briefing

Queen’s Speech: what does it mean for UK business?

Popular articles

The link between Bill Gates and Jeffrey Epstein examined
Bill Gates
Behind the scenes

The link between Bill Gates and Jeffrey Epstein examined

TV crime dramas to watch in 2021
Chris Rock stars in the fourth series of Fargo
In Review

TV crime dramas to watch in 2021

What is Donald Trump up to now?
Donald Trump
In Depth

What is Donald Trump up to now?