Analyst: Gold retail demand has room to grow

The chief executive officer of an American precious metals retail exchange has yet to see a significant surge in demand among small retail investors as gold prices continue to make new all-time highs.

Stefan Gleason, CEO of Money Metals Exchange, told Investing News this week that aside from a record-breaking demand in March 2023 due to a regional banking crisis, demand has leveled off since the surge resulting from the pandemic.

Where is the demand?

Data compiled by the World Gold Council shows an increasing demand for gold, but most of that activity is coming from the East, not the West.

“It’s coming from Asia and central banks,” Gleason said. “Over the past year, the major driver of the gold price has been the east.”

On the retail side of things, Gleason said he has noticed an uptick in activity among high-net-worth customers, but has yet to see any meaningful demand spike among the average retail investor.

Lower demand means room to grow

Gleason said the reserved demand for gold among retail investors could be indicative of the yellow metal having room to grow despite its already impressive rally to more than $2,500 an ounce.

“We’ve seen more selling from retail customers that we usually see because of the higher prices that people are seeing,” he said. “It’s just interesting that we still have a very small percentage of the American people that own gold and silver. It’s probably double what it was five years ago — it’s kind of leveled off — but my best estimate is about 2% of Americans own gold and silver outside of jewelry.”

Gleason said using gold and silver as a store of generational wealth is common, and cultural, in many Asian cultures.

“I think eventually we will get back to that,” Gleason said of American investors. “There’s a war on savings and one way to opt out of that system is to get physical gold and silver.