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Retail Gold Demand Fell To Lowest Level Since 2000; More Demand Needed To Turn Prices Around - Expert

Kitco News

(Kitco News) - It’s not surprising that the gold market disappointed investors in 2018, as one market analyst noted that gold retail demand fell to its lowest level in nearly two decades.

“People who sell precious metals to investors, or sell precious metals to retailers who sell to investors, are painfully aware of this,” Christian told Kitco News on the sidelines of the Vancouver Resource Investment Conference. “But the reality is that last year investors bought about 13.8 million ounces of gold on a net basis. That was the lowest level since 2000.”

Softness in the physical market was just component of a weak market place. Spot gold fell 1% in 2018 as gold ETF flows trended lower for the most of the year before ticking up in the fourth quarter, as financial market volatility increased.

Christian said that investor interest has not yet returned in 2019 so far, even as gold prices have held steady in the new year.

“For prices to rise much more rapidly than we’re expecting, investors would have to come back much more forcefully than we think,” he said.

Spot gold prices trended higher in the first half of January, rising to a high of $1,294 an ounce, before falling back to $1,270.8 an ounce as of Thursday.

In a report released last week, analysts at CPM Group said that they could see gold prices push above $1,300 an ounce within the next two months, before prices are ultimately dragged lower in what is traditionally a slow period for the precious-metals sector.

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