Gold traders are the most bullish in a month after mints around the world said demand for bullion coins is surging and central banks added to reserves even as prices slumped the most in three decades. Fifteen analysts surveyed by Bloomberg expect prices to rise next week, 11 were bearish and three were neutral. Sales of gold coins from the US Mint are poised for the biggest month since December 2009 and the UK Mint said purchases tripled in April. Russia and Kazakhstan boosted reserves for a sixth month as stockpiles across central banks climbed to an eight-year high, International Monetary Fund data show.
Gold tumbled into a bear market April 12 and by the end of the following session had retreated 14 per cent, the biggest two-day drop since 1983. The slump highlighted some investors’ loss of faith in the world’s traditional store of value, even with nations still engaged in unprecedented money printing. The acceleration in demand for physical bullion since then signals the change isn’t universal.
“Lower prices are bringing back long-term holders,” said Adrian Day, who manages about $160 million of assets as president of Adrian Day Asset Management in Annapolis, Maryland. “All the reasons people were buying gold over the last few years remain intact, particularly the global monetary expansion and currency debasement.”
The metal fell 13 per cent to $1, 458.55 per troy ounce in London this year. Unless it rallies by the end of December, gold will have its first annual decline since 2000, halting the longest winning streak since the end of World War I. The Standard & Poor’s GSCI gauge of 24 commodities dropped 3.8 per cent since the start of January, the MSCI All-Country World Index of equities rose 7.3 per cent and a Bank of America index shows Treasuries returned 0.6 per cent.
The US Mint said April 23 it suspended sales of the smallest gold coins after demand more than doubled. The mint sold 196,500 ounces through April 24, from 62,000 ounces in March, data on its website show. Demand “shows no signs of abating,” Shane Bissett, director of bullion and commemorative coin at the UK’s Royal Mint, said April 24. Standard Chartered said April 23 its physical gold sales to India exceeded the previous record by 20 per cent and UBS said the same day its flows there are near the highest since 2008.
Source: Bullion Bulletin