Flat Gold Prices Dent London Trading, Silver Jumps

LATEST DATA from wholesale-participants' trade body the London Bullion Market Association show the volume of gold dealing easing as volatility in Gold Prices stayed subdued in June from May, while volumes in Silver Bullion rose.

This drop in the volume of physical gold transferred between the biggest bullion banks in London – heart of the world's wholesale gold and silver trade – "reflect[ed] a lack of appetite to trade," says the Association in its short comment, "particularly from the [investment] funds whose positioning is at an historic low."

A marked rise in Silver Bullion dealing, however, may have been due to "the relatively large intra-day ranges in silver during June compared to May," the LBMA adds, "whereas those for gold were largely unchanged."

The significant increase in silver trading also reflects "an increase in physical demand," says the LBMA, "particularly from India."

Based on the volume of gold transfers made last month between the 11 market-making members of the LBMA, London's wholesale activity slipped 1.6% by weight from the month before, easing back to average 19.1 million ounces per day (594 tonnes).

By value, those transfers eased 1% lower to $30.6 billion. Best estimates say that figure should be multiplied by 5 times or more to suggest the true overall Gold Dealing volume through London. A survey of all LBMA members in early 2011 put the total value at $240 billion in gold each day.

Silver dealing in contrast jumped 10% last month by weight to average 149.1 million ounces per day (4637 tonnes). By value, it rose 8% despite a drop in prices to average $4.2 billion per day.

Daily volatility in Silver Prices also jumped in June, analysis by BullionVault shows, while Gold Prices remained subdued. On average, daily swings in the Dollar price of silver rose by almost one-half to give a volatility reading of 37%.

Volatility in Gold Prices only rose from 17% to 21% in June from May. It hit a 3-year high in September 2011 at 37%.

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