ETF investors sell gold, coin investors buy gold

via Commerzbank

The gold price is continuing to recover from its historic collapse at the beginning of the week and this morning has climbed to $1,426 per troy ounce. Whereas gold ETFs have seen outflows totalling nearly 60 tons since the start of the week, demand for coins has surged. According to the latest figures from the U.S. Mint, 153 thousand ounces of US gold coins have already been sold since the month began.

This means that the current month has already achieved the highest sales volume of any month since December 2009. According to the World Gold Council, demand for coins and bars last year accounted for approx. 80% of investment demand. The latest slump in the price of gold was triggered by the futures market. The CFTC’s data on market positioning, due to be published after close of trading today, will show the extent to which money managers withdrew from gold in the wake of the crash at the start of the week.

According to data from the European Automobile Manufacturers’ Association (ACEA), 1.31 million cars were sold in March, which is 10.2% down on the year-on-year figure. First-quarter car sales plummeted 9.7% year on-year to 2.99 million units. Unlike the markets in China and the US, the European auto market thus remains under pressure, which is also affecting demand for platinum, used to make autocatalysts for diesel engines, especially for the diesel-heavy European auto market. Despite weaker demand from the automotive industry, we believe the price of platinum will rise as the year progresses because the supply problems in South Africa should increase their impact in our opinion and lend support to the price. The slide in the price of platinum observed since last Friday – the precious metal had shed around 10% at its peak within just three days – is attributable in our view to platinum having been caught up in gold’s downward pull.