Gold price waits for rates clues from Jackson Hole

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 Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

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.