The managing director of Devon-based IFA Philip J Milton & Co, said the fall in gold prices from a high of £1052.56 per Troy ounce on 29 March this year, to £759.72 an ounce on 2 December “bodes well for the over-priced commodity”.
He said: “If the price keeps slipping, gold miners are likely to increase the amounts of forward selling of their gold.
“The implication of this can be that the price falls at a quicker rate, as miners care more about covering their costs and making a known profit, rather than mining it and selling at levels below the high fixed cost of extraction as they can’t suddenly stop digging-it-up.”
However, while saying that a fall in the price of gold could make it more attractive to buyers, he added: “There are better things to buy. Gold mining shares are very depressed at the moment and offer better value than the actual commodity.”
This came as the World Gold Council said that overall demand for gold in the third-quarter of 2013 was 869 tonnes, down 21 per cent on the same period a year ago.
However, demand remained strong across most countries and sectors, except for gold-backed exchange-traded funds, which had net outflows of 119 tonnes for Q3, compared to 402 tonnes in Q2 2013.
Demand also fell in India where the result of government intervention in the Indian gold market saw demand down by 71 tonnes.
