FX.co ★ Demand for precious metals picks up

Gold prices dropped by nearly 7% between April and June. However, the physical market saw solid growth, according to the latest report from the Royal Mint.On Thursday, the British Mint said that sales of its gold bullion coins had increased by 8% quarter-over-quarter. At the same time, silver bullion sales increased by 47% compared to the sales in the first three months of 2022.The mint added that it continues to see strong international sales, with specific demand growing among American consumers.Andrew Dickey, Precious Metals Divisional Director at The Royal Mint, said they had developed a strong international base of investors. He added it was encouraging to see such strong international sales, particularly from the US.The latest report from the British mint appears to be bucking the trend of slowing sales among significant mints. The US Mint sold 315,000 ounces of gold during the second quarter, down 26% from the first quarter.The US Mint saw a demand drop sharply in June as it sold 52,000 ounces, according to the mint's revised data.At the same time, the Perth Mint sold 244,737 ounces of gold in the second quarter, down 6% from 261,357 ounces sold in the first quarter.Some economists believe that the drop in bullion demand reflects nuances in the marketplace, as higher premiums are pricing consumers out of the market. Premiums are high because of a supply and demand imbalance, as bullion investors are holding on to the physical metal.At the same time, analysts have said that the sharp drop in gold prices is expected to lead to an increase in physical demand. On Thursday, gold prices dropped below $1,700 an ounce, hitting a nearly one-year low following the release of the US Department of Labor report.

The US Producer Price Index added 1.1% in June following a 0.9% increase in May, faster than the 0.8% gain expected.

The report noted that headline inflation had rose by 11.3% from a year ago in June, near the record 11.6% posted in March.According to the report, core inflation, which excludes food and energy costs, surged by 0.4%, slightly below expectations. The markets expected an increase of 0.5%.