Gold losing its shine as US investors lose interest

Added 4th October 2016

Western investor sentiment and demand for gold and silver retreated in September, falling off three-year highs with US new accounts falling by almost one-third.

Gold losing its shine as US investors lose interest

According to global trading platform BullionVault, the Fed holding interest rates last month, coupled with the looming presidential election resulted in a sharp dip in interest from US investors.

The platform’s Gold Investor Index, which measures the balance of private investors growing their gold holdings with those reducing them, declined from 56.0 in August to 55.0 in September.

If the number of net buyers and sellers were equal, the index would read 50.0. September 2011 saw a series peak of 71.7 with a low of 50.5 during winter 2014-15.

Adrian Ash, head of research at BullionVault, said: “September typically marks a strong month for both gold prices and private investor interest. But maintaining the summer's pace of growth following the Brexit shock was always going to prove a big ask.

“While demand remains positive, neither the US Fed's decision to hold rates nor the looming US election have so far extended 2016's remarkable upturn in precious metals investment.”

He said the gold market suggested American households were far more sanguine about the election than the news headlines indicated.

Meanwhile silver’s run of six monthly gains from February to August represented the metal’s longest stretch of rising prices since 2006, yet this too fall off last month.

BullionVault’s Silver Investor Index dropped from its three-year high in August of 57.3 to 52.9 for September as prices made their second consecutive month average decline. 

With precious metals a key holding in many client portfolios, Portfolio Adviser compared the merits of two very different gold funds here

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