BullionVault’s Gauge of Client Buying Unchanged From 8-Month Low

BullionVault, an online service for investors to buy and sell physical gold and silver, said its Gold Investor Index was unchanged in June from May’s eight-month low, as prices slumped 11 percent.

The gauge held at 53, the London-based company said today in an e-mailed report. It reached a 16-month high of 58.6 in April. A reading above 50 means more buyers than sellers. The company’s users still sold 3.7 percent of their holdings last quarter. The metal fell 25 percent this year to $1,264.50 an ounce by 8:32 a.m. in London.

Bullion slid 23 percent last quarter, the most since at least 1920, as Federal Reserve Chairman Ben S. Bernanke said that the Fed may slow its bond-buying program this year. While Standard Bank Plc’s SBG Securities (Pty) Ltd. unit said July 1 that physical demand has been “strong” at prices below $1,600, Barclays Plc said the purchases have been weaker than when gold entered a bear market in April, partly because India, the top buyer, imposed curbs on imports.

“The sharp drop in gold prices is starting to polarize private investor attitudes,” Adrian Ash, head of research at BullionVault, said in the report. “June’s torrid price action led some long-term holders to take profits. But other people are taking this opportunity to buy gold near three-year discounts.”

Gold trading volume increased 31 percent to 7.3 metric tons in the second quarter from the first three months of the year. The client buying gauge peaked at 71.7 in September 2011, the month gold reached a record $1,921.15.

BullionVault’s customers own about $1.2 billion of gold, the company said. The metal is stored in vaults in London, Zurich, New York and Singapore.

(For more on the gold bear market, see EXT5.)
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