Retail gold buyers take profits in bullion after Brexit price surge

By Jan Harvey

LONDON (Reuters) - Retail gold investors are booking profit on metal bought to hedge against Thursday's decision by British voters to leave the European Union, while an initial surge in buying slackened off on Monday.

The chief executive of online platform BullionVault said on Monday that while buying had risen sharply in the last session, its users had overall been net sellers since the Brexit vote became apparent on Friday, liquidating a quarter of a tonne of gold.

"Our users bought a lot of gold going into this crisis, and some are selling to bank substantial profits from Friday's shock," Paul Tustain said.

Wolfgang Wrzesniok-Rossbach, chief executive of German bullion dealer Degussa, and Pieter Boumeester of Dutch precious metals vendor Doijer & Kalff, said they had also received several enquiries about selling gold.

In New York, gold dealers reported their busiest day in months, as phones rang off the hook with new orders.

But after a surge in the business on Friday, "over the weekend, and our online shop is open 24/7, we have seen only the usual business," Degussa's Wrzesniok-Rossbach said.

Edward Kay, president of Buyers of New York, said he had received 25 calls during the first few hours of Friday morning as news of Brexit sank in, compared to around 5 to 8 on a normal day.

"We received non-stop phone calls of people trying to sell their gold, their bullion, their jewellery," Kay said. "We had a whole full waiting room of people."

Uncertainty and high prices dampened the initial jump in gold demand from retail investors, who flocked to bullion after the Brexit news unleashed a slide in stocks, sterling and the euro.

UK buyers snapped up bars and coins, while dealers as far afield as the United States, France, Germany and Singapore reported surging demand.

"The first news on Friday led to good demand, but people are giving it a second thought now," Degussa's Wrzesniok-Rossbach said. "People are uncertain whether Brexit will actually take place in the short term... the stock markets have come off, but we're not talking about a meltdown. I think that's why people didn't rush to buy more gold."

WAIT AND SEE

European bank stocks and the pound were set for their biggest two-day slides on record on Monday as Britain's vote shook up global financial markets for a second day.

Nonetheless, Richard Hayes, chief executive of the Perth Mint, said its customers were sticking to "wait and see".

"If the price rise is sustained, then we'll see additional demand come to the market, but what people don't want is to buy at these prices, then a week from now, it's $50 bucks lower," he said.

Singapore-based precious metals retailer Silver Bullion Pte Ltd said its sales of gold and silver normalised over the weekend after surging more than 600 percent in its four-hour peak sales window on Friday.

In India, which vies with China for the title of the world's biggest gold market, high prices on Monday are putting off some potential buyers. Many Asian consumers dislike higher prices because they see gold as a long-term store of wealth, rather than a speculative investment.

Dealers in India were offering a record discount up to $57 an ounce to the global spot benchmark on Monday, against $30 on Thursday. Indian gold prices peaked at 31,925 rupees per 10 grams on Friday, the highest since September 2013.

"Demand is very dull. Consumers think prices will not be sustained at higher levels," Mukesh Kothari, director at bullion dealer RiddiSiddhi Bullions in Mumbai, said. "(Buyers) are postponing purchases."

Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong, agreed that high prices were likely to put off its customers. "Unless it comes below $1,300, we won't see too much demand at this level," he said.

(Reporting by Jan Harvey in London, Gus Trompiz in Paris, Josephine Mason and Luc Cohen in New York, Rajendra Jadhav in Mumbai, Michael Hogan in Frankfurt, Anthony Deutsch in Amsterdam, Melanie Burton in Melbourne and Koustav Samanta in Bengaluru; Editing by Veronica Brown and Ruth Pitchford)