Physical gold demand in London jumped after this week’s price drop, dealers said on Wednesday, as consumers were tempted back to the market by the metal’s technically-driven slide through 1,000 pounds an ounce.
Online gold trading platform BullionVault.com saw its heaviest trading day on Tuesday since its all-time record on June 24, the day of the UK referendum result on European Union membership, head of research Adrian Ash said.
Other bullion dealers also reported higher sales following the fall, sparked by a bounce in the dollar that pushed the metal though key technical support at $1,300 an ounce.
“We have an awful lot of clients who were waiting for a pullback in gold, so the phones have been busy here,” Sharps Pixley Chief Executive Ross Norman said. “We’re close to 1,000 pounds an ounce, (and) people want to get in at these levels.”
Spot gold fell 3.3 percent on Tuesday, its biggest one-day drop in three years. Gold in sterling, which had outperformed spot after jitters over Brexit pushed the pound to a 31-year low versus the dollar, also fell 2.5 percent.
Interest in gold, much of it from first-time buyers, has jumped this year as consumers sought the metal as a refuge from financial market stress and unexpected “black swan” events such as Brexit.
“What we’ve had clearly is customers waiting for a pullback in price,” Ash said. “We did 9 million pounds worth of business yesterday, six times the daily average of the previous week.”
Another dealer at a leading London bullion merchant said its sales had also jumped after the price drop, particularly from Indian buyers. India is one of the world’s biggest gold consumers, with a strong cultural affinity with the yellow metal.
“It’s perfect timing for Diwali,” he said, referring to the Indian festival of light, seen as an auspicious time to buy gold. “We’ve certainly seen more activity in the last 24 hours from the Indian community.”
Josh Saul, owner of the Pure Gold Company, said his company had a 28 percent increase in enquiries overnight, and an 18 percent increase in sales on Wednesday compared with Tuesday.
“The general sentiment is that gold is a stronger buying opportunity than it was on Monday,” he said.
“We believe that the Deutsche Bank saga and update on the Brexit deadline is the impetus behind a 19 percent increase in gold sales over the last seven days. We saw similar sentiment to that in June, with buyers worried about another Lehman style crash coupled with uncertainty over the UK leaving the EU.”