Fed tests gold upleg
Gold’s outlook and fundamentals remain really bullish.
After a dismal week capped by Friday’s stronger than expected US jobs report that sent the gold price towards its 2015-lows, the metal regained its footing on Monday.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery – the most active contract – by early afternoon had gained $5.20 to $1,173 an ounce from Friday’s close.
Sentiment among gold buyers remains weak however with investors in exchange traded funds backed by physical gold pulling 9.5 tonnes from global gold ETFs during the first week of June.
It was the fifth week in a row of outflows with some 35 tonnes leaving funds during the period. Total holdings have now fallen to 1,592 tonnes or 56 million ounces – below 1,600 tonnes for only the second time since April 2009 and 120 tonnes below this time last year according to Saxo Bank.
The ETF market rebounded at the beginning of 2015 with roughly 60 tonnes of inflows in January, but the gold price drop mid-March prompted a loss of confidence and a renewed sell-off.
Annual outflows from gold-backed ETFs were 159 tonnes in 2014 following a staggering 880 tonne drop in 2013. Global ETFs hit a record 2,632 tonnes or 93 million ounces of gold in December 2012.
The futures market has also been hit be negative sentiment with the latest Commitment of Traders data showing hedge funds building up huge short positions – bets that prices will fall.
SEE ALSO: End of an era as largest gold ETF drops out of top 10
In May more than $900m left the world’s largest physical gold-backed ETF, dropping the fund to number 11 in rankings it briefly led four years ago
2 Comments
gene byrge,
ETF’s are the tail wagging the dog. Gold demand and price are controlled by consumer demand.
JH
What Frik never explains is…where does the outflow go? It does not evaporate…someone is happy to buy it. Are they the stupid guys art the table? Or are those selling the stupid guys?
Time for Frik to actually do some impartial and thorough study on who is doing what. 880 tonnes goes to who…and that who is happy to hold.