ETF Securities Commodity ETP Weekly – Investors Shun Gold for Oil as Bargain-Hunting Resumes
• Declining oil prices attract bargain hunters.
• Precious metals recorded largest outflows in 19 weeks, totaling $309mn last week.
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Precious metals recorded largest outflows in 19 weeks, totaling $309mn last week. As the price of gold slid to its lowest level since March 2010, ETFS physically-backed gold holdings saw net outflows of US$284mn, the largest in 19 weeks. Market sentiment towards the yellow metal continued to wane as existing home sales reached an 81⁄2 year high and jobless claims reached an 81⁄2 year low in the US increasing the probability of a rate hike and continued US dollar strength. There has been a significant decline in the ‘net’ long exposure in gold, with positioning reaching its lowest level since June 2013. This week Swiss customs data reported total gold outflows in June at 98.5 tonnes, its lowest level since August last year. Swiss gold shipments to China were down sharply by 25 per cent m-o-m while shipments to India were down a modest 12.5 per cent m-o-m. As India approaches wedding season we view current levels as supportive for accumulating positions.
As platinum dipped below the $1000 an ounce for the first time in more than 6 years, investors continued to sell out of long platinum ETPs. Outflows amounted to US$22.4mn, the highest since March 2015. Downward price pressure in PGMs led investors to offload US$7.3mn from ETFS Physical backed Palladium (PHPD). Investors are clearly spooked by the violent price declines, despite the prospects for a supply deficit amid strengthening demand for pollution abatement technologies.
Key events to watch this week. Investors will be on the lookout for direction on US interest rates as the Federal Reserve Open Market Committee convenes this week. While no change is expected at this meeting investors will be poised for cues on rate increases at its September meeting, when consensus expects the first rate increase since 2006. US durable goods orders, consumer confidence and GDP data will provide further guidance on dollar strength this week.
Video Presentation
Aneeka Gupta, Research Analyst at ETF Securities provides an analysis of last week’s performance, flow and trading activity in commodity exchange traded products and a look at the week ahead.
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ETF Securities Research team
ETF Securities (UK) Limited
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