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July Gold Bullion Sales at 12-Year-Low as Market Rallies

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(Kitco News) - Although demand for physical gold and silver bullion pushed slightly higher this month, one analyst said it is investment demand that is driving the market, not physical.

The latest data provided by the U.S. Mint shows that a total of 5,500 ounces of gold, in various denominations of American Eagle gold bullion coins, were sold last month. This is the worst July performance in 12 years.

In total, July sales were up 10% compared to dismal June sales. For the entire year, gold bullion sales totaled 114,500 ounces, down 26% compared to the 155,500 ounces sold during the first seven months of 2019.

Bart Melek, head of commodity strategy at TD Securities, said that physical sales numbers are not typically market drivers and weaker physical demand should not be too much of a concern.

“As far as the broader market is concerned, I don’t think these numbers really matter at all,” he said.

Melek added that market uncertainty will continue to support investment demand and drive prices higher. He noted that with U.S. President Donald Trump’s recent announcement of additional tariffs being imposed on Chinese imports, gold may have another rally on the way.

“[This announcement] raises the prospect of a significantly weaker U.S. economy, market volatility for equities, and probably a federal reserve that will most likely have to continue on an easing cycle,” Melek said. “That is very good for gold, mainly because interest rates will drop and so will the U.S. dollar.”

Physical silver demand was up last months with the U.S. Mint selling 1,240,000 ounces, up almost 17% from the previous month. The rise in demand coincides with silver’s July rally, in which the precious metal hit highs of $16.685/oz.

So far this year, the mint has sold 11.3 million ounces of silver, up approximately 31% from the 7.7 million ounces sold during the same timeframe last year.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.