Gold sales from Australia’s Perth Mint, which refines nearly all of the nation’s bullion, surged after prices plunged, adding to signs that the metal’s slump to a two-year low is spurring increased demand.
“The volume of business that we’re putting through is way in excess of double what we did last week,” Treasurer Nigel Moffatt said by phone, without giving precise figures. “There’s been people running through the gate.”
Bullion plunged 14 percent in two sessions through April 15, entering a bear market after losing 28 percent from its record in September 2011. The recent slump was one of the largest corrections in modern history, Deutsche Bank AG said. Gold is now poised to move higher as the physical market reacts after the decline, according to HSBC Holdings Plc.
“There’s been significant sales made as people see this as great value,” Moffatt said yesterday. “Gold owners are very reactive to significant market movements.”
Gold for immediate delivery, which slumped 9.1 percent on April 15, climbed 1.1 percent to $1,382.36 an ounce at 5:44 p.m. in Singapore. Prices, which peaked at $1,921.15, dropped to $1,321.95 yesterday, the lowest level since January 2011.
Gold’s drop has been excessive as there are still a lot of troubles out there, Dominic Schnider, head of commodities research at UBS AG’s wealth-management unit, said today, citing the potential for a weaker dollar and debt concerns. Still, the metal may drop to the so-called marginal cost of production at $1,150 if investment demand doesn’t return, Schnider said.
In India, the world’s largest gold consumer, the plunge may make bullion more affordable, said Mehul Choksi, chief executive officer of Gitanjali Gems Ltd., the nation’s biggest retailer of jewelry and diamonds by sales. Japanese individual investors doubled gold purchases on April 16 at Tokuriki Honten Co., the country’s second-largest retailer of the precious metal.
Sales from the Perth Mint may climb even as gold rebounds as some people wait for the price to advance before buying, Moffatt said. “We’ll see a fair bit of buying on renewed strength,” he said.
The Perth Mint’s sales of gold coins climbed 49 percent to 97,541 ounces in the three months ended March 31 from a year earlier, according to data from the facility in Western Australia that was founded in 1899.
The selloff in gold was sparked by investor concern that European governments may have to follow Cyprus in selling part of their holdings and exacerbated as the metal fell below so- called technical-support levels, Goldman Sachs Group Inc. said yesterday. BlackRock Inc. said that it was a “panic event.”
Gold is headed much higher over the next decade, investor Jim Rogers said today, adding that he may start buying after a so-called selling climax. Gold was set for a correction and recent decline may be it, he said on Bloomberg Television.
To contact the reporter for this story: Phoebe Sedgman in Melbourne at firstname.lastname@example.org
To contact the editor responsible for this story: James Poole at email@example.com