Demand for bars and coins are up, but inflation, a key driver of gold prices, is unlikely to return until the economy opens up, said Peter Hug, director of global trading at Kitco Metals.
“I’m quite surprised. Retail demand is extremely strong on both gold and silver, especially in the coin market and to some extent the bar market,” Hug said. “Premiums are starting to rise both for the Eagles and the Maple Leafs for both gold and silver. It’s been difficult for dealers to keep inventory on the shelves.”
Retail investors are concerned that the U.S. dollar will be devalued with continued stimulus from the government, Hug said, which is why they’re moving into the physical market.
The gold-backed ETF flows have remained weak throughout November and December, with net negative flows recorded for both months by the World Gold Council.