The decline in the price of the yellow metal is encouraging self-directed investors to snap up gold, a platform operating in the space says.

The price of gold has threatened to sink below $1,000 – despite a slight recovery yesterday – but the fall in the yellow metal has spurred more investors to snap up the asset for the first time than at any point since January this year, according to online precious metals trading platform BullionVault.

Actual sentiment towards gold among self-directed investors in the West was at its highest level for more than two years in July, according to the firm’s Gold Investor Index. BullionVault has 56,000 users worldwide.
 
The number of people starting or growing their personal gold bullion holdings rose for a third month running on the firm’s gold and silver platform, it said.

Meanwhile, the number of existing investors who chose to sell on the platform rose by 50 per cent from June to reach the highest level since January. This put the index, a proprietary measure of the balance of buyers over sellers, at 54.5 last month, just down from June's 54.6 but otherwise holding the strongest reading since the price crash of Spring 2013 unleashed a wave of new demand.

More broadly, the decline in the gold price from its September 2011 record of over $1,900 per ounce has happened at a time when investors have expected the US Federal Reserve to start increasing interest rates towards the end of this year or early in 2016 – a move that typically detracts from the "safe-haven" allure of gold. Worries about a Greek exit from the euro and the fragile state of the mainland China equity market haven’t yet created a sufficient contrary force to keep gold prices from weakening. (To view a set of commentaries about gold recently, see here.) Gold has often formed significant portions of high net worth individuals’ holdings, although debate remains on how much diversification the metal brings in practice.

"July's price drop took gold to its cheapest levels since early 2010. US, UK and Euro investors all responded strongly as gold crossed key threshold points at $1,100, £700 and €1,000 per ounce,” Adrian Ash, head of research at BullionVault, said.

"Gold last month saw the strongest growth in new UK investors since March. The number of new eurozone investors rose 20 per cent above the recent 12-month average."

Ash said that delays in Fed rate hikes and a delay in dollar-based gold prices in July probably galvanised some of the buying in July.

“New US customers last month accounted for the largest proportion of all new BullionVault users since the start of 2011,” he said.

Client gold vaulted with the firm in London, New York, Singapore, Toronto and Zurich grew to more than 34.2 tonnes, breaking above 1.1 million ounces for the first time.

Sentiment towards silver bullion also remained strong in July, but eased back more notably than gold's, falling to 55.3 from June's 26-month high of 56.7 on the Silver Investor Index.