Mint of Treasury: A drop in the price of gold should not be expected

The recovery in the gold sales market is ongoing. According to forecasts by experts from Mennica Skarbowa, in the coming months we can expect a several percent increase in sales of products from gold compared to last year. One of the important trends that will contribute to this is the growing interest of Poles in small gold weights, especially in the online sales channel. Gold prices should not be expected to decline, as this is due, among other things, to the rising costs of its extraction. As Adam Stroniawski, managing director of sales at Mennica Skarbowa, admits, customers are increasingly interested in easy access to investment products, which translates into an increase in demand for small units of gold, especially those chosen as a gift.

There is a recovery in the gold sales market, which suggests a possible return to sales levels before the Covid-19 pandemic. In the near future, the industry may experience mergers of companies or failures of smaller brokers due to lower revenues and changing market conditions – forecasts the Management Board of the Treasury Mint.

Last year, there was a significant decline in sales of gold investment products across Europe. Only in Germany there was a 70% reduction in demand for products made of this metal. Also in Poland, last year 40-50% fewer gold investment products were sold in Poland compared to 2022. According to Mennica Skarbowa estimates, this year there may be a several percent increase in gold sales compared to 2023. One of the important trends which may contribute to increasing demand is the growing interest of Poles in small gold weights, especially in the online sales channel. Customers are increasingly interested in easy access to investment products, which translates into an increase in demand for gold bars of a few grams and lower value coins.

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We observe that the years of the pandemic have changed the shopping preferences of Poles, making us accustomed to online shopping. We notice this especially when customers buy bullion as a gift. Then they do not need to visit a branch, provide advice or see the products in person. What matters to them is the availability of the coin or bar and the low cost of efficient delivery.

The consolidation of companies will continue

Analyzing the situation on the Polish market, I believe that in the near future the industry will witness many consolidations. Mergers of companies or collapses of smaller brokers will soon be increasingly visible in Polish everyday life. This is due to lower revenues and changing market conditions. We are already observing that small companies and companies that did not generate the desired profits in 2020-2022 have become unprofitable and are looking for solutions that are beneficial to them. Therefore, consumers should be even more aware of where they make purchases to avoid potential unpleasantness related to the instability of some entities on the market.

Gold price and prospects for the coming months

Just a year ago, we could buy an ounce of gold for approximately $1824. It has gone up by over $200 over the course of a year. At the moment, I see no reason to significantly adjust the course. In the first week of March this year. the price of gold has reached an all-time high of $2.200 per ounce, opening the door to potentially big moves in the market. Gold has been gaining higher values ​​since last year, and upcoming macroeconomic events may further stimulate its price. Concerns about the global economic outlook, geopolitical tensions and changing expectations for early interest rate cuts FED systematically drive increased demand. The cost of purchasing the bullion should remain at a similar level in the near future or reach only a slightly higher level than currently. Last year - as estimated by Mennica Skarbowa - 40-50% fewer gold investment products were sold in Poland than in 2022. 2024 should be a better year for the industry. We see a good chance that the market will return to the pre-pandemic sales growth rate Covid-19. Increasingly more expensive real estate and falling interest rates on deposits on the one hand, and the active accumulation of gold by central banks on the other, mean that there is a good chance of a significant increase in consumer interest in gold and silver. If we look at the statistics, we will see that only 14% of Polish residents have ever bought gold. This shows that only a small group of Poles have so far noticed the profitability of investing in gold. I believe that this may soon change, also because Poles are increasingly buying gold as gifts for their loved ones, e.g. for First Communion or wedding receptions.

Author The Treasury Mint