Commerzbank’s Physical Gold Trading Is Active in Bear Market

Commerzbank AG (CBK), Germany’s third-biggest lender, said its physical gold trading volumes are “good” this year and activity remained stable since bullion tumbled into a bear market in April.

“We have remained busy in physical business, with volumes picking up further as the price fell,” David Burns, head of commodities at Commerzbank, said in an interview in London on Aug. 13. “Volumes have been good and there has been demand across most groups of market participants, but especially private clients seeing a second opportunity to enter the market and industrials, particularly fabricators covering physical needs.”

Gold is down 20 percent this year, heading for the worst run since 1997 and on course to break a 12-year winning streak. Bullion retreated amid concern the Federal Reserve will curb bond-buying aimed at stoking the U.S. economy and as some investors bet on rising equity markets. The MSCI All-Country World Index of shares climbed 11 percent in 2013.

Bullion’s plunge fueled demand for jewelry, bars and coins, spurring buyers in leading consumers India and China to pay higher premiums and seek supplies. Consumer demand in India, the biggest buyer, jumped 71 percent in the second quarter and China, the second-largest, gained 87 percent, helping to push global bar and coin purchases to a record and jewelry usage to the most since 2008, the World Gold Council said in a report today.

Jewelry Demand

Global jewelry demand jumped 37 percent to 575.5 metric tons in the second quarter, and combined global bar and coin sales advanced 78 percent from a year earlier to an all-time high of 507.6 tons, with demand more than doubling in India and China, the WGC said.

“Levels of activity have been mostly stable since April, perhaps slightly slower now entering the holiday period,” Burns said.

Gold for immediate delivery rose 0.1 percent to $1,337.83 an ounce by 12:17 p.m. in London. On June 28, prices fell to $1,180.50, the lowest since 2010.

Commerzbank is one of the top three global bullion banks and trades physical metal as well as futures with parties from mining companies to central banks and institutional clients, according to its website. The lender owns a stake in Mendrisio, Switzerland-based precious-metals refinery Argor-Heraeus SA.

To contact the reporter on this story: Maria Kolesnikova in London at mkolesnikova@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.