Gold News

Gold Profit-Taking Slows Near Zero at New Record Prices

Demand in France beats Germany 6th month running amid snap election...
FRESH record-high gold prices failed to spur fresh dis-investing among Western investors in June, with users of BullionVault slowing their gold selling towards zero for the first time in almost a year, writes Adrian Ash at the world-leading precious metals marketplace.
Gold demand was positive in France once again, contrasting with the UK and topping Germany for the 6th month running. The number of first-time bullion buyers in Europe's 3rd largest economy also set its highest quarterly total in 3 years amid the political upheaval of the snap election called by President Macron but led so far by Le Pen's National Rally
As a barometer of investor anxiety, in other words, gold demand is currently strongest in France. Gold investing in other Western economies remains soft, but the pace of profit-taking has slowed dramatically, and continued strength in bullion prices signals underlying doubt and uncertainty about the political and financial outlook.
Used by more than 100,000 private investors from 175 countries – 9-in-10 of them living in Western Europe or North America – BullionVault today cares for $3.3 billion of physical gold (£2.7bn, €3.1bn, ¥542bn), all stored and insured in each client's choice of London, New York, Singapore, Toronto or Zurich, plus $1.1bn in silver (£866m, €1.0bn, ¥176bn) and $90m (£71m, €84m, ¥14bn) in platinum-group metals.
Worldwide, the number of investors starting or adding to their physical gold investment in June slipped 12.0% from May's figure to the lowest since March. But the number of people reducing or selling all their holdings across the month fell by 14.4% to the fewest since last June, totalling barely one-third (34.9%) of March's record high.
Together that edged down the Gold Investor Index – a unique measure of private trading behaviour in physical bullion – to 53.9, half-a-point beneath May's 11-month high but 6.4 points above the series low of 47.5 set in March as gold prices surged with the highest quarterly finish since June 2023's reading of 56.2.
The Gold Investor Index set a decade peak at 65.9 as the Covid pandemic hit Europe and north America in March 2020. Tracking the number of net buyers versus net sellers each month, a reading of 50.0 would signal a perfect balance between the two.
Chart of the Gold Investor Index vs. month-end Dollar gold price. Source: BullionVault
While the price of physical bullion in US Dollars slipped 0.7% in June from May's new record monthly gold close of $2346 per Troy ounce, the precious metal set its second quarter-average record in a row, adding 12.9% to $2338 and finishing with a new quarter-end high of $2331.
Gold for both UK and Euro investors set its 3rd consecutive quarter-average record at £1853 and €2171 respectively and also set new month- and quarter-end highs at £1845 and €2178.
By weight, investors as a group overall were net sellers yet again on BullionVault, cutting their holdings for the 10th month in a row. But liquidation slowed to its weakest since net selling began last September, totalling just 31 kilograms.
That small outflow – equal to only 9.1% of the previous 9 months' average net selling and just 3.1% of March's record-heavy investor gold liquidation – took the total quantity of gold bullion now vaulted for customers of the West London fintech down to 45.1 tonnes.
Within June's action, French investors were net buyers for the 6th month running, the only major market where demand has been positive by weight in 2024 to date, albeit adding only 26 kilograms since New Year. That contrasts with 710kg of selling by UK investors, 406kg from US residents, 161kg from German investors and 28kg from users living in Italy.
Across the second quarter of 2024, the number of new users in France was greater than the number in Germany for the first time since the end of 2013, jumping by 80.5% from Q1 to set the highest quarterly total since the start of 2021.
What next? After finishing the first half of 2024 at new quarterly records, the price of gold looks set to continue its underlying uptrend as the UK and US follow France to the polls. That political uncertainty is adding to gold's appeal as investment insurance. And longer-term, the fiscal and monetary backdrop is supportive for gold prices too. Because whether it's far right versus hard left in France, Tory versus Labour in the UK, or Trump versus Biden in the States, a vote against rolling budget deficits isn't on the ballot paper.
Nor can the electorate vote for or against central banks cutting interest rates now that inflation has stopped making headlines.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver, platinum and palladium market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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