Has Gold Lost Its Gleam? Why Sellers Are Flooding the Market
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As the price of gold lingers near its all-time high, an increasing number of Americans appear to be cashing out. Unfortunately, when investors decide to dump their precious metals at the same time, gold dealers aren’t willing to pay a premium.
The yellow metal has been riding a rally for much of 2025 and hit a record-breaking $3,500.05 in April as anxiety about President Donald Trump’s “Liberation Day” tariffs sent investors fleeing a volatile stock market in favor of safe-haven assets.
As of press time, gold has gained 39.36% this year, compared to the S&P 500's 6.39%. With stock market volatility down 68% from its year-to-date high, investors are transitioning back to higher-risk assets. But those looking to sell their gold may be in for a rude surprise.
“It's a function of supply-demand dynamics,” says Philip Newman, managing director at research and consulting firm Metals Focus Ltd. When demand was hot, gold dealers would pay a premium for gold bars or coins because they knew they could quickly resell them at an even higher price.
Today, that dynamic has reversed; although the value of gold is high, so many people are looking to sell right now that dealers might only willing to buy it back at — or even below — the spot price of the metal.
“If you're a dealer in the secondary market, you adjust how much you're willing to pay by how quickly you can shift it,” Newman says. “If the market is weak, then the price you quote could be a smaller premium or even a steeper discount.”
While not unheard of, this dynamic — which means that sellers are, in effect, paying a fee to offload their gold — is atypical, says Alex Ebkarian, COO of Allegiance Gold. “This is a rather uncommon phenomenon,” he says.
Why is gold sentiment falling?
As a commodity, gold has intrinsic value. As an asset, its appeal is also psychological, says Oliver Blagden, gold and base metals analyst at CRU International Ltd.
“Gold demand is predominantly driven by sentiment — particularly among retail investors,” he says via email. Most Americans who buy physical gold are located in red states, he points out. Optimism about President Trump’s policies and expectations of economic growth could be nudging some of these investors out of gold and into equities in anticipation of a rising stock market.
From this point of view, “Now is a good time to sell their gold and invest back into capital markets,” Blagden says.
Another big reason why so many people are selling their gold right now is because prices skyrocketed so fast and so high that people who bought gold two or three years ago are still making a nice chunk of change on their investments.
“You have your profit takers [who] got in at $1,700, $1,800 — they pretty much doubled their money,” Ebkarian says.
Ebkarian also says the 2023 entry of warehouse chain Costco’s entry into the gold market played a role. Its one-ounce gold bars have been so popular that the company tightened purchase restrictions in May.
Most businesses that sell gold to retail investors also buy it back; Costco — which doesn’t buy back gold — scrambled that model.
“When Costco flooded the market with gold, people were able to buy your generic products,” he says. “Because Costco is not buying back, there was an uptick in retail investors who were selling part of their metals. Because of that, premiums are not attractive right now.”
What’s ahead for gold prices in 2025?
Ebkarian says that secular trends such as rising government debt and central banks’ gold-buying are bullish for gold in the long term. “Gold is going to respond positively to those driving forces, but in the short term, you are going to see some fluctuations,” he predicts, forecasting some volatility over the next three to six months.
Elevated gold prices could support a continuation of retail investors selling off some of their holdings, according to Newman. “Overall, we think prices will remain strong, and that will encourage some liquidations.”
Lingering inflation fears and the erosion of the dollar’s value could also prompt retail investors to sell their gold when prices are high, as they are right now. “You can understand why many retail investors may be keen to exchange their gold for large amounts of cash,” Blagden says. “Many will view the high prices too tempting to pass.”
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