DEMAND for physical Gold Bullion "remains largely absent" from the gold market, according to one precious metals analyst – writing on the day spot market Gold Prices broke through $1626 per ounce for the first time ever.
"[This] underscores our belief that at current levels gold will continue to meet growing resistance," said Marc Ground, commodities strategist at Standard Bank, on Wednesday.
"Consequently, we would not be surprised to see a pull-back."
Ground also points out that the supply of recycled Gold Bullion – for example from jewelry – could increase towards the end of 2011.
"We don't discount the possibility of more gold scrap coming to market in the second half of this year, said Ground.
"However," he warned, "as August approaches, we believe the probability of more scrap coming to market decreases rapidly. Seasonally Q4 is the strongest quarter for gold jewelry demand and we would expect buying interest to ramp up in August ahead of seasonal demand, even if prices remain relatively high."
The Financial Times reported earlier this week that in China – home of the world's second-largest Gold Bullion market – consumers are delaying purchases because of the high Gold Price, while others are choosing to sell their gold.
"Over the past week our pawnshop has had more than ten gold cash-ins every day," the FT quotes a pawnshop worker in the town of Wuxi.
In Hong Kong meanwhile Gold Bullion dealers confirmed on Wednesday that the physical market was "very, very quiet", with Chinese dealers "still on the selling side".
Chinese investors bought just under 91 tonnes of investment Gold Bars and coins in the first quarter of 2011, according to figures published by the World Gold Council – a 123% increase compared to the same period last year.
Jewelers and analysts in India and China reported last week that gold demand remained robust, in spite of gold's unprecedently high price levels.
Get the safest gold at the lowest prices with BullionVault...