The refund should be given in the exact currency paid, bitcoins.

If I traded 55 oz of silver coins for 1 gold coin and you never delivered the gold coin and the silver/gold ratio changed to 30 would you only give back 30 oz of silver? The idea that you have to sell a coin back to them instead of getting a refund nonsense, he paid for delivery so he either gets it delivered or a full refund.

USD don't enter into it. If the person wanted to trade in USD they likely would have gone to a conventional gold dealer.

No company should use their customer as a hedge. It is not the customers fault that the company spent bitcoins on gold that they could not ship before the price in bitcoins went down.

They need either send the metal he paid for or return all of the payment. To give back less bitcoins than paid it nothing short of a rip off.