Gold sales from Australia’s Perth Mint, which refines nearly all of the bullion mined in the country, declined for a second month in June as prices extended a bear-market slump, deterring buyers.
Sales of gold bars and coins totaled 49,460 ounces in June, compared with 92,781 ounces in May and 116,755 ounces in April, according to data from the mint. Sales were 52,704 ounces in March, before the rout, the data show.
The slowdown adds to signs that while gold’s plunge deepened over the second quarter as prices fell to the lowest since August 2010, a buying frenzy seen in April wasn’t repeated last month. Bullion lost 23 percent in the three-month period amid speculation that the Federal Reserve will curb its asset-buying program as the U.S. economy recovers. Bullion may drop to $1,050 over 12 months as haven demand wanes, UBS AG said today.
Buyers increased purchases in April “but in May and June have realized that prices are still coming down and it’s not doing as well,” Ron Currie, sales and marketing director at the mint, said in a phone interview from Perth. “They’re waiting to see how the market goes.”
Bullion for immediate delivery was little changed at $1,252.19 an ounce at 3:58 p.m. in Singapore. Prices tumbled 11 percent in June after dropping 6 percent in May and 7.6 percent in April. Analysts at banks from Morgan Stanley to Goldman Sachs Group Inc. trimmed gold forecasts last month.
Sales of coins and jewelry surged around the world after bullion entered a bear market mid-April, spurring a 13 percent rebound in prices in less than three weeks. The rush drove volumes on the Shanghai Gold Exchange, China’s largest spot bullion market, to the highest ever in April, bourse data show.
There are signs interest has slowed. The U.S. Mint sold 57,000 ounces of American Eagle gold coins in June from 70,000 ounces in May and 209,500 ounces in April, according to data on its website. In India, the largest user last year, imports may drop 52 percent in the third quarter after government curbs, according to the All India Gems & Jewellery Trade Federation.
Global physical demand has been weaker than in April, partly as India imposed curbs on imports, Barclays Plc said on July 1. So-called price-sensitive buyers may wait for a well-defined bottom before entering the market, James Steel, an analyst at HSBC Securities (USA) Inc., wrote in a June 24 report.
Goldman Sachs cut its price target for the end of 2013 to $1,300 from $1,435 and expects holdings in exchange-traded products to decline by about 1 million ounces (31.1 metric tons) a month, according to a June 23 report. Investors are assuming an earlier tapering of quantitative easing and a Fed fund rate increase sooner than the bank’s economists expect, it said.
Assets in the SPDR Gold Trust, the largest bullion-backed ETP, were unchanged yesterday after decreasing to 964.69 tons on July 2, the least since 2009. Investors have sold 595 tons from ETPs this year, according to data compiled by Bloomberg.
There’s a risk that ETP holdings may contract by a further 500 tons, Dominic Schnider, head of commodities research at UBS wealth-management unit in Singapore, said on Bloomberg Television’s “First Up” with Rishaad Salamat today.
Outflows from ETPs combined with so-called positioning cuts in futures & options will probably increase the availability of gold by 500 tons to 800 tons in the next six to 12 months, Schnider and Giovanni Staunovo wrote in a June 20 report.