Gold fever cools: UK investor sentiment drops fastest in 14 years

UK investor sentiment in gold sank from post-pandemic highs in April, making its sharpest fall since the end of the global financial crisis on BullionVault’s Gold Investor Index UK.

With UK investors typically trading £2,400 of gold at a time on the West London fintech’s 24/7 marketplace, the Gold Investor Index tracks the number of gold buyers versus sellers each month. Now used by over 130,000 people worldwide, BullionVault cares today for £6.8 billion of securely-stored gold, silver, platinum and palladium for its global client base.

This New Year’s spike in gold prices saw the Gold Investor Index UK set its highest readings since summer 2020. But it then made its fastest drop since January 2012 in April as the price of gold extended its retreat in Sterling terms.

“The fever in gold is finally cooling,” says BullionVault director of research Adrian Ash. “While UK investor sentiment remains exactly in line with its long-term average, it’s fallen at the fastest pace since the global financial crisis began to recede 14 years ago.

“The number of first-time investors in physical precious metals fell in half last month from March. But so too did the weight of profit-taking by existing owners. Net-net, private investors are buying gold at these lower prices, just without the fireworks or noise of the New Year’s historic rush.”

After March’s crash in gold prices drew a record number of buyers worldwide on BullionVault, the Gold Investor Index UK fell in April to its lowest reading since last July at 54.8, dropping 6.2 points from March.

While that reading exactly matches the UK index’s 5-year average, its monthly drop was the steepest decline since the 9.6-point plunge of January 2012, when property prices began to recover from the financial crisis alongside economic growth and global stock markets.

Running since 2010 and peaking at 61.4 this January, the Gold Investor Index UK signals that buyers outnumber sellers with any reading above 50.0. The UK index set a series low of 47.3 in March 2024 and a record high of 72.4 in September 2011.

“When the gold fever of the early 2010s finally broke, it left investors who’d bought at the peak of the financial crisis out of pocket for almost a decade,” says Ash.

“Gold has now plainly entered a period of flat if not falling prices as the market cools again, But what’s different today is that the long-term drivers of gold’s underlying bull market remain very much in place.

“Central banks continue to build their gold reserves as trust and political alliances break down. Government debt, currency debasement, and the need to diversify investment risk are only worsening as the return of Trump’s trade war collides with the Iran conflict’s energy-price shock.”

The number of new first-time UK users on BullionVault halved in April from March’s count, down by 53.7% to the fewest since August but still running almost one-third above the past 5 years’ monthly average (+29.8%).

Global trading volumes using BullionVault’s low-cost access to wholesale gold also halved last month from March, down 52.0% to £140 million and falling to 1/6th of January’s record level.

The weight of profit-taking among existing gold owners worldwide halved as well last month (-52.7%), helping net demand run positive for the 2nd month in a row. That grew the total quantity of gold now belonging to BullionVault’s global user base by another 0.2% to the most since November at 43.5 tonnes worth £4.7 billion.

“It’s hard to overstate the fever which has now broken in precious metals investment,” says Ash. “The past six months brought more new UK investors to BullionVault than any full year in our two-decade history, including the Covid crisis of six years ago or the financial crisis peak of 2011.

“Experience says that a repeat is unlikely any time soon. But the 2020s’ perma-crisis shows no sign of letting up, and while the Iran War has so far seen oil strangle bullish bets on gold and silver, bad news has a habit of proving good for bullion prices and investment long term.”