Today’s AM fix was USD 1,376.75, EUR 1,041.89 and GBP 887.37 per ounce.
Friday’s AM fix was USD 1,410.00, EUR 1,065.12 and GBP 905.53 per ounce.
Gold fell $33.30 or 2.36% on Friday to $1,378.70/oz and silver slid to a low of $21.56 and finished down 4.89%. Gold was down 0.45% and silver fell 2.75% last week.
Gold is marginally lower in dollars today but has eked out gains in Japanese yen and Australian dollars both of which have fallen. The slightly lower close last week (-0.45%) was bearish technically and could weigh on prices this week.
Sentiment towards gold remains as bearish as we have seen it in many years which is bullish from a contrarian perspective. The weak hands and speculative froth has been taken out of the market as seen in the decline in ETF holdings and COT data.
However, physical demand remains robust internationally as seen in the demand figures coming from refineries and government mints.
Mints from the Perth Mint in Australia to the U.S. Mint, to the Austrian Mint and the Royal Mint in the U.K. continue to report a surge in sales after gold’s recent price falls led to a marked increase in physical demand.
Britain’s Royal Mint, which saw its gold coin sales triple in April, said the surge in demand has continued into June. British people are diversifying into gold due to concerns about the UK property market and the risk of inflation.
As a result of a zero interest-rate environment, many investors and savers in the UK have shown increased interest in gold coins in recent years in order to preserve wealth.
British sovereign and Britannia gold coins are especially attractive given their capital gains tax free status which makes them far more attractive than ETFs and all other forms of gold ownership in the UK.
“Since the dip in the price of gold, the Royal Mint has seen a steep increase in demand for its gold coins which has continued over recent weeks,” Shane Bissett, director of bullion and commemorative coin at the Royal Mint, told Bloomberg.
“An additional attraction for customers based in the UK is that gold coins are VAT free and capital gains tax free”, said Bissett.
Sterling has lost 50.07% of its value versus gold in the last 5 years of the global debt crisis. The euro has lost 46.3% of its value versus gold during the same period.
Demand for U.S. gold and silver bullion coins remains at “unprecedented” high levels almost two months after the historic sell-off in gold released years of pent-up demand from retail buyers, the head of the U.S. Mint said last week.
Muenze Oesterreich AG, the Austrian mint that makes euro denominated gold and silver coins, expects “quite good business” for gold in the next couple of months on wealth-protection demand due to central banks continuing to print money.
It warned that physical gold is safer then exchange traded funds and pointed out that “private investors in particular have realized that physical gold is perhaps an even safer asset than ETFs.”
The Austrian mint did not see a surge in demand recently but demand remained steady with the mint selling the same amount of ounces from January to May as in the first five months of 2012, Marketing and Sales Director Andrea Lang said in an e-mailed response to questions from Bloomberg.
“We expect quite good business for the next couple of months,” Lang said. “Same good reasons for buying gold as a year ago are still valid. Global stimulus forecasts and effectively negative interest rates are helping gold, as well as the fact that it is seen as a safe haven.”
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