Gunvor Group Ltd. is giving up trading physical precious metals less than a year after the commodity house started a business dedicated to buying and selling gold.

At least two traders are leaving the company in Geneva and Singapore, according to people with knowledge of the matter, declining to be identified as the decision isn’t public. Seth Pietras, the firm’s spokesman in the Swiss city, declined to comment by phone and e-mail today.

Gunvor, the world’s fifth-largest oil trader whose former major shareholder and co-founder was sanctioned by the U.S. this year because of ties to Vladimir Putin, is one of the few large commodity firms that handles precious metals. The move into gold was part of an expansion into non-oil businesses that now include iron ore, industrial metals and natural gas. Gold trading was done by a handful of people in Singapore and Geneva.

Among the departures are Francois Beuzelin, hired in 2012 as head of metals in Geneva, and Cedric Chanu, who started in Singapore in January as a precious-metals trader, the people said. Chanu declined to comment by phone and Beuzelin didn’t answer calls to his office nor an e-mail sent via his LinkedIn account.

Base Metals

Gunvor executives decided to abandon the precious metals trading business partly because of difficulties in finding steady supplies of gold where the origin could be well documented, one of the people said. Gunvor’s announcement earlier this year that it would begin physically trading precious metals was unusual as neither Glencore Plc (GLEN), the biggest metals trader, nor Trafigura Beheer BV, the second largest, trade physical gold.

Gunvor continues to trade base metals, including copper and aluminum, as well as bulk commodities such as coal and iron ore. It opened an office in Shanghai this year that now employs 20 people to trade industrial metals and other non-oil products. Last month, it hired Michael Harrison from Mercuria Energy Trading SA to head the EMEA region’s copper desk from Dubai, according to two people familiar with the matter.

Founded by Swedish national Torbjorn Tornqvist and Gennady Timchenko, sanctioned by the U.S. in March because of his close ties to Putin, Gunvor has expanded into other commodities and in Asia to diversify beyond its roots trading Russian crude oil, which now accounts for less than 4 percent of the firm’s trading volume.

Gold Slump

Timchenko sold his 44 percent interest in the company to Tornqvist the day before he was sanctioned. The U.S. Treasury Department said Putin has investments in Gunvor and may have access to the company’s funds. The trader has denied any connections to Putin and has provided U.S. officials with documentation regarding its shareholders and ownership structure.

Gunvor’s exit from physical precious metals trading follows that of Deutsche Bank AG, which announced its departure last month.

Gold prices have slumped 37 percent from a record in September 2011 as the U.S. economy improved, raising expectations that interest rates will increase, damping demand for non-yielding assets like bullion.

Bullion for immediate delivery fell 0.7 percent to $1,219.10 by 15:20 p.m. in London.

BloombergBusinessweek