Mixed economic data and rising interest rates on cash continue to hamper net demand for precious metals, but existing investors are holding onto their bullion after gold and silver reversed this summer’s earlier price drop.
That’s according to the latest Gold Investor Index data from world-leading precious metals marketplace BullionVault.
Gold prices bottomed in mid-August at 5-month lows for US Dollar and Euro investors and new 2023 lows in British Pound terms, before rebounding to erase all of the summer’s previous losses in the last week of the month.
That volatility left the Gold Investor Index – a unique measure of private investing behaviour in physical bullion – almost unchanged at 54.2, up by 0.1 points from July and 0.2 points above August 2022.
Tracking the number of people starting or growing their holding of securely vaulted gold against the number of people choosing to sell, the index peaked at 65.9 as the Covid Crisis began in March 2020. It signals more buyers than sellers with any reading above 50.0.
According to BullionVault director of research Adrian Ash:
“High gold prices plus rising interest rates continue to deter new buyers while also inviting profit-taking among existing investors. But selling remains muted, and gold owners as a group are keeping hold of the precious metal as investment insurance, mindful of the mixed economic outlook and the threat to wider global financial markets from China’s real-estate slump.”
Gold priced in Chinese Yuan recently set a fresh all-time high, reflecting both the currency’s decline on the FX market and solid household demand in the precious metal’s largest consumer market.
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Silver prices were more volatile than gold in August, rising 0.7% across the month but losing 2.5% on a month-average basis. That drop invited some bargain-hunting among users of BullionVault, with the Silver Investor Index rising 1.9 points to 50.2 as buyers returned to outnumbering sellers but very slightly.
By weight, September’s 1-tonne growth in the total quantity of silver belonging to BullionVault users marked only the 6th inflow of the last 12 months, with client stockpiles ending August at 1,245 tonnes, still 1.8% smaller than last October’s record.
Gold holdings, in contrast, have expanded in 10 of the last 12 months, setting three new all-time records this summer to reach 48.2 tonnes at end-August, albeit with a mere 1 kilogram net inflow across the month as a whole.
Taken together, the number of first-time bullion buyers rebounded 27.9% last month from July’s 9-year low, reaching the most since May and led by a surge in new investors living in Germany, the UK and France.
New interest in the USA, in contrast, continued to run at the weakest since the bear market in gold and silver of a decade ago.
Said Ash: “While gold’s safe haven appeal is winning out against silver’s greater volatility and industrial uses right now, the lack of a clear threat or crisis means that net inflows remain soft. That’s likely to change if financial markets start to worry about spillover from China’s real-estate slump or the impact of rising interest rates on Western economic growth.”
