Retail Gold Buying Soars After Sharp Sell-Off

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Physical gold buying among private investors surged in April as they took advantage of bargain prices after bullion's historic sell-off, according to a survey by BullionVault.

BullionVault says it is an online physical gold and silver market for more than 47,000 self-directed individual investors.

The company said Tuesday its Gold Investor Index rose to 58.6 in April, its highest level in 16 months. In March, the gauge fell for a third-consecutive month to 53.3.

A number above 50 indicates more buyers than sellers. While net buying by the firm's mostly buy-and-hold type customers is seen as bullish, net selling might suggest individual retail investors are exiting the gold trade.

"The difference between the fast money of speculators and self-directed investors couldn't be any more obvious," said Miguel Perez-Santalla, vice president of BullionVault.

"It is apparent that the private investor was waiting for the right opportunity to get in," he said.

Gold's historic sell-off last month has intensified a disconnect between funds that sold on dissatisfaction over bullion's underperformance and individual investors who could not get enough physical gold coins and bars at bargain prices.

BullionVault said its April gold trading volume, measured by weight, rose to its highest level since December 2011. In dollar terms, volume rose 57 percent in April versus March.

The price of bullion fell $225 per ounce between April 12 and 16 after the European Central Bank and the International Monetary Fund asked Cyprus to sell reserves as part of a bailout deal and some feared the Fed might withdraw its stimulus.

Since then, strong physical demand around the world has boosted gold prices and cut that drop by more than half.

Spot gold traded nearly flat at around $1,468 an ounce on Monday, nearly $150 above a two-year low of $1,321.35 an ounce on April 16.