Investing.com - Financial Markets Worldwide

Physical Gold Demand Surges

ByGoldMoney News Desk
Published 04/24/2013, 03:10 AM
Updated 05/14/2017, 06:45 AM
GC
-
SI
-
BIG
-
FISI
-

After the white-knuckle ride of the last week and a bit, the gold market appears to have calmed somewhat in recent days. The price is no longer falling by triple-digit amounts in single sessions, or gaining significant amounts either. Bulls will have been given some encouragement though by the strong bounce off of the $1,350 level reached during the frantic selling eight days ago. That it’s sticking above $1,400 is also constructive, though the short-term price chart still looks horrible.

But just as the cure for high prices is high prices, the cure for low prices is low prices. The last week has seen a surge in demand for physical gold (coins and bars). The FT quotes experienced Hong Kong dealers citing the biggest demand surge for 30-50 years, while The Wall Street Journal reports that Indians are paying $10 premiums above spot – “four or five times the premium usually seen in periods of peak demand” according to traders in the country. In America meanwhile, US Mint gold coin sales stand at 167,500 this month, compared with 20,000 during the same month last year.

So where do we go from here? It will probably take some time for gold (and silver) to bounce back from last week’s serious set back. That said the fundamental reasons behind gold’s ascent in recent years have not changed. Developed world countries are continuing to live beyond their means – something reflected in stubbornly high trade and government deficits. Asian central banks and private savers remain determined gold buyers. Confidence in major financial institutions remains ephemeral and eggshell thin.

Which suggests the selling was overdone. Gold and silver will recover.

Latest comments

Loading next article…
Install Our App
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2025 - Fusion Media Limited. All Rights Reserved.