After precious metal prices collapsed, they staged a significant counter movement yesterday, gold gaining by 4% for a time and briefly regaining the $1,400 per troy ounce mark. Silver was trading more than 5% up for a while at just shy of $24 per troy ounce. Nonetheless, gold and silver proved unable to hold onto their gains, shedding part of their price increases again during the course of trading.
All the same, some market players clearly regarded the low prices as an attractive opportunity to buy precious metals. According to media reports, demand for coins and bars has picked up significantly amongst retail investors, with gold traders such as “pro aurum” and “Heraeus” reporting exceptionally high buying interest.
The U.S. Mint has also sold 83.5 thousand ounces of gold coins and more than 2.2 million ounces of silver coins so far in April. Thus sales of gold coins are now already more than four times as high as they were in the whole month of April last year. Silver coins have also seen year-on-year sales increase by 46%. Australia’s Perth Mint likewise reports that it has already sold more than twice as many gold coins this week as it did last week.
In response to the new market situation, we have adjusted our gold price forecast and believe the price will now average $1,650 per troy ounce in the fourth quarter. Driven by fears of lost purchasing power in the event of a devaluation race between currencies, high sovereign debt levels in the industrialized countries, low real interest rates and ongoing buying interest among central banks in emerging economies, gold should resume its upswing.