Gold Coin Premiums Rise For First Time in Weeks - Gold Futures Also Higher
Gold futures managed to close Friday’s session in the black, bucking the trend of a higher US dollar. Over the full week the commodity appreciated roughly 1%, its first positive finish of the month.
Gold was lower for most of Friday’s session, but ended up being 20 cents higher when trading closed. At the same time gold inched higher, the US dollar held up about 0.5%. The US dollar was under pressure the rest of the week, and that contributed to gold’s earlier, positive momentum. Still, the US dollar is trading around an eight-month high.
Gold, overall, has been under pressure this month on the expectation that the Fed will increase interest rates. Gold’s relative weakness combined with the pickup of seasonal demand has improved physical demand for gold. According to dealers, Asian demand for jewelry is improving, particularly in India. Also demand for gold-backed ETFs is holding steady.
This positivity for physical gold demand spilled over into the gold coin market this week, sending gold coin premiums higher for the first time in weeks. Among the major gold coins, American Gold Eagle coin premiums increased to $57.10 from $56.63 last week, American Buffalo premiums increased to $58.37 from $57.89 and Canadian Maple Leaf rose to $44.41 from $44.14.
Meanwhile, in the US physical gold demand could be increasing ahead of the election. With the vote just weeks away, investors are translating a potential Donald Trump presidency and more uncertain and unstable, and therefore increasing their gold holdings when polls tip in his favor. When Hillary Clinton is in the lead, gold is attracting less investor interest. As this is a short-term phenomena with a definite end date, gold coins could lose some of their investment appeal once the election concludes.