Look For Gold Bullion Coin Sales To Pick Up In Second Half - ETF Securities
(Kitco News)- U.S. Mint sales data show gold bullion demand is seeing itsweakest first half in 10 years, but one analyst expects sales to pick up in thesecond half of the year as consumers adjust to stable prices.
As of the end of May, the U.S. Mint reported sales of 172,000ounces of gold in various denominations of American Eagle gold bullion coins, adecline of almost 51% compared to 351,000 ounces of gold sold in 2016.
In an interview with Kitco News, Maxwell Gold, director of investment strategy at ETF Securities, said that coin sales are highly pricesensitive so it is not surprising that bullion sales have struggled as gold has rallied almost 13% since the start of the year. Tuesday, August gold futureshit a seven-week high, last trading at $1,295 an ounce.
"A lot of retail investors are on the sidelines right nowwaiting for a better entry point," he said. "If we see prices stabilize between$1,250 and $1,300 an ounce, we could expect to see a resurgence in coin sales."
Despite the weak sales numbers, Gold said that this onesector of the market has limited impact on overall prices. Institutionalinvestor demand will continue to be the biggest driver of prices going forward,he added.
The main catalyst for gold and bullion coin sales are FederalReserve interest rate hikes, said Gold. CME 30-Day Fed Fund futures are pricingin a 96% chance of a rate hike next week. However, the outlook after the Junemeeting remains highly uncertain. Markets are pricing in a less than 50% chanceof a third rate hike by the end of December.
"A slower pace of interest rate hikes and higher inflationcould push gold to last year's highs," he said.
It isn't just the U.S. Mint that is seeingweaker sales so far this year. For the first quarter of 2017, the RoyalCanadian Mint reported a 1% drop in bullion sales. The Canadian mint sold atotal of 208,300 ounces of goldin the first three months of the year, down compared to 210,600 sold in thefirst quarter of 2016.
By Neils ChristensenFor Kitco News
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nchristensen@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities,securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.  |