Neils Christensen Neils Christensen
Monday May 01, 2017 13:27
(Kitco News) - A more than 3% rally in gold that helped push prices to a five-month high last month created a significant drag on U.S. Mint coin sales.
The latest data provide by the Mint shows that a total of 6,000 ounces of gold, in various denomination of American Eagle gold bullion coins, were sold last month. This is the worst April performance in five years and the lowest sales pace in 16 month.
In total April sales were down 71% from March sales, which marked a 15-month low in demand.
For the year total gold bullion demand was 172,000 ounces, down almost 51% compared 351,000 ounces sold during the first four months of 2016.
Bart Melek, head of commodity strategy at TD Securities, said that because of the recent rally in gold prices, it is not surprising to see weaker physical demand as coin and bar sales are highly sensitive to prices.
He added that sales should pick in May as prices have fallen from their five-month highs and consumers are adjusting to the idea of gold trading above $1,200 an ounce.
Ultimately though, he said that physical demand will not have much impact on prices this year.
“Coin sales is not traditionally a market driver. We think gold market continues to depend on the Federal Reserve and interest rates,” he said.
Physical silver demand was also muted last month with the U.S. Mint selling 835,000 ounces, down more than 48% from the previous month. The drop in demand also coincides with future prices rallying to a 5-month high in mid-April.
So far this year the mint has sold 8.8 million ounces of silver, down more than 53% from 18.9 million ounces sold during the same timeframe last year.