Gold rises more than 1%

GOLD futures have climbed, taking cues from signs of strong physical buying of the metal as some investors saw its recent slump as a buying opportunity.

The most actively traded contract, for June delivery, rose $US14.90 ($A14.58), or 1.1 per cent, to settle at $US1,423.70 a troy ounce on the Comex division of the New York Mercantile Exchange.

Dealers of gold coins and bars in trading hubs world-wide have reported a sharp increase in activity following gold's historic sell-off last week.

Some buyers, gold dealers and traders said, viewed gold's two-session, $US200-an-ounce retreat as an appealing opportunity to buy the metal at prices not seen in more than two years.

"People are saying 'it's finally down here, I have the opportunity'," said Frank McGhee, head precious metals dealer with Integrated Brokerage Services.

Some gold retailers have increased the premium above the gold price they charge consumers for products, and inventories of some products are running low.

"I've been receiving calls from customers wanting to know where they can go to buy up gold coins and bars as jewellers have exhausted their stock," said Biju Joy, general manager of Dubai Gold & Jewellery Group, a trade association.

The US Mint this week stopped selling its smallest-denomination gold bullion coins after the surge in demand ran down inventories.

In a memo to coin dealers on Monday, the Mint said year-to-date demand for one-tenth-ounce coins was up 118 per cent compared with the same period last year, and it had suspended sales of the product to allow time to replenish inventories.

The Mint also sells gold bullion coins in one-ounce, half-ounce and quarter-ounce sizes. Total Mint gold sales this month stand at 183,000 ounces, according to data on the agency's website, up from 20,000 ounces in all of April 2012.

Still, some investors remain wary of holding gold.

Investors in gold-backed exchange-traded funds have consistently cashed out since gold's nine per cent decline on April 15. Such funds currently hold about 2,230 metric tons of gold, according to UBS, down 11 per cent so far in 2013.

"Can retail (coin buyers) really turn the market around?" said McGhee.

"Several million ounces have come out of the ETFs, somebody has to buy it."

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