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US, Perth mints see renewed demand for gold bullion; Aussie silver shines bright

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(Kitco News) - Recession fears and the ongoing inflation threat prompted retail investors to jump back into the gold market as two major global mints reported increases in their gold and silver bullion sales.

Sales data from the U.S. Mint showed that it sold 64,500 ounces of gold in various denominations of its American Eagle gold bullion coins. Sales are up 24% from June's sharp drop. Last month's sales are up 10% from July 2021.

While gold demand picked up in July, investors are still reluctant to buy physical silver. The data from the U.S. Mint shows that it sold 850,000 ounces of silver last month, down 8% from June. Sales are down sharply, falling nearly 73% from July 2021.

Analysts have said that retail investment demand for silver has struggled as recession fears continue to grow. A global recession would reduce industrial demand for silver, representing about 60% of the global market. Analysts have said that gold is seen as a more sturdy, safe-haven asset in the current environment.

Meanwhile, on the other side of the globe, the Perth Mint said it sold 79,305 ounces of gold in July, an increase of 21% from July. At the same time sales are up 12% from last year.

The Perth Mint also said it sold 2.47 million ounces of silver last month, up 62% from June and 89% from July 2021.

"We continued to experience extremely strong demand for physical silver," said Neil Vance, general manager of minted products at the Perth Mint. "Even with a strong month for output, silver coins remain subject to allocation."

Philip Newman, managing director of Metals Focus, said that demand for gold and silver bullion picked up in July as the sharp drop in prices provided investors with bargain hunting opportunities.

Although sales in the past two months are sharply lower compared to earlier in the year, Newman said that physical demand is on pace to match last year's strong demand.

"Everything mints are producing is being sold," he said. "We expect to continue to see robust demand for bars and coins in 2022."

Bart Kitner, president of Kitco Metals Inc, said that although demand picked up in July, it is too early to see if there is a new trend in the market; however, he added that he would expect physical demand to increase as fears over a recession continue to grow.

"Physical precious metals will become more attractive, assuming that the recession causes the individual to have less confidence in the economy, the U.S. dollar, and the integrity of the financial system," he said.

Some analysts have said they expect physical demand to pick up through the rest of the year as markets start to price in a slower pace of rate hikes from the Federal Reserve. Although interest rates have been increasing, inflation – at a 40-year high – remains a significant threat and will continue to support solid gold demand, analysts have said.

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.