Etikett: precious metal

Precious metal ETP outflows surge as sentiment sours

Precious metal ETP outflows surge as sentiment sours ETF Securities WisdomTreePrecious metal ETP outflows surge as sentiment sours

ETF Securities Weekly Flows Analysis – Precious metal ETP outflows surge as sentiment sours

Highlights

  • Precious metal weekly outflows surge amidst a stronger US dollar and rising US Treasury yields.
  • WTI’s discount to Brent widens and outflows from crude oil ETPs rise for the sixth week in a row.
  • Yen ETPs remain well bid, despite the soft economic patch reported in Q1.

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As WTI’s discount to Brent crude oil prices deepens, outflows worth US$5.4mn continue for the sixth week in a row. Brent prices surged to US$80 per barrel for the first time since November 2014; likely owing to the ongoing concerns of supply from Venezuela and Iran. The unsurprising overnight victory of President Nicolas Maduro at the Venezuelan election is likely to spark unrest within the nation and worsen the decline in Venezuelan oil production. Last week the International Energy Agency (IEA), showed signs of further tightening on the oil market, as oil stocks in OECD countries decreased in March to their lowest level in three years and dipped below the five-year average for the first time since 2014. The crude oil inventory reduction was aided by record high crude oil exports, as the deep discount of the WTI price with Brent is making US crude oil more attractive to the international buyers. In contrast to the inventory build reported by the API, the US department of Energy reported a 1.4 million barrel fall in US crude oil stocks. Furthermore, US oil rig count held steady at 844 last week after rising for six weeks in a row.

Gold ETPs faced weekly redemptions worth US$82.3mn, the highest level in 12 weeks. Gold prices faced significant pressure as the US dollar strengthened and 10-year US treasury yields crossed 3.112% last week. The yield differential of the 10-year US Treasuries versus the equivalent German government bonds of the same maturity widened to 250 basis point, marking its widest level in over 30 years. This points to further strengthening of the US dollar against the euro and more weakness ahead for gold prices as it fails to yield any interest, making it appear unattractive in the current rising rate environment. Meanwhile, gold’s historical role as a safe haven, may allow significant upside potential from the ongoing geopolitical risks emanating from protests in Gaza, uncertainty over the Iranian Nuclear agreement, US-China trade wars, the Korean conflict and progress from the coalition of populist Eurosceptic parties in Italy.

Gold prices declined for a time to their lowest level since the start of the year, falling below the psychologically important $1300 mark, such low levels should also encourage physical buying. Silver prices recouped some if its losses over the latter half of last week resulting in the gold/silver ratio declining to 78.5. Investors took profits as we saw weekly outflows from Silver ETPs surge to US$98.4mn their highest level since September 2017. Precious metal basket ETPs also saw US$12.3mn worth of 0utflows as sentiment toward the precious metals sector deteriorated.

Long Yen ETPs versus the Euro attracted the highest inflows in 10 weeks, last week. Following eight consecutive quarters of growth, the Japanese economy contracted in the first quarter as GDP contracted -0.6% more than consensus estimates owing to sluggish household consumption and capital spending. However strong corporate profitability, an upbeat global growth outlook and signs that wage pressures are starting to build provide evidence that the Japanese investment case still remains intact.

For more information contact:

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0)207 448 4330
E research@etfsecurities.com

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Precious metal ETP flows strengthen as trade tensions continue

Precious metal ETP flows strengthen as trade tensions continue

ETF Securities Weekly Flows Analysis – Precious metal ETP flows strengthen as trade tensions continue

Highlights

  • Bargain hunters continued to drive strong inflows into gold ETPs – worth US$16.1mn – supported by ongoing trade tensions and geopolitical risks.
  • Crude oil ETPs faced redemptions worth US$32.7mn, the highest level in five weeks, on the back of profit taking as oil prices rose for the second week in a row.
  • Outflows from nickel ETPs widened the most in 3 weeks as prices rose over concerns of further US sanctions on Russia.

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Bargain hunters drove US$16.1mn of inflows in gold ETPs, marking two consecutive weeks of inflows. Gold prices came under pressure as bond yields rose sharply. The yield on the 10-year Treasury, rose to 2.96% the highest it’s been since January 2014 following supportive comments by the Fed governor Lael Brainard, for continued gradual increases in the Federal Funds rate. Added to that, the Federal Reserve Beige book showed a solid outlook for the US economy, while noting concerns over a potential trade war. Silver ETPs received US$12.8mn, marking the fifth consecutive week of inflows. Silver prices were lifted higher by industrial metals strong performance last week and managed to outperform gold by a strong margin of 3.5%. The gold/silver ratio for a time reached 78, its lowest level since early January.

Crude oil ETPs faced redemptions worth US$32.7mn, the highest level in five weeks, on the back of profit taking. Brent crude oil price reached US$74 per barrel last week, a level last seen in November 2014. The price appreciation has been supported by a trifecta of reasons – the decline of US crude oil inventory by 1mn barrels reported by the American Petroleum Institute (API), OPEC’s commitment to production cuts and ongoing geopolitical tensions. According to the Joint Technical Committee (JTC) of those OPEC and non-OPEC countries participating in the cuts, the oversupply in the oil market is nearly over. OECD stocks are likely to dip below the five year average over the coming quarter. Prices eased a little on Friday as President Trump accused OPEC of driving up oil prices artificially. This accusation comes at a critical time for Saudi Arabia. The country needs a high oil price ahead of an IPO of its state oil company, Saudi Aramco which is seen as an important step to spearhead the restructuring of its economy.

Industrial metal basket ETPs received inflows worth US$3.9mn, in stark contrast to outflows from copper, nickel and aluminium ETPs of US$4.6mn, US$14.1mn and US$5.3mn respectively. Outflows from nickel ETPs widened the most by US$14.1mn over the last three weeks on the back of profit taking. Nickel prices rose 7.5% on Thursday marking their highest daily increase in 6½ years and putting prices at their highest level since December 2014 owing to concerns of further sanctions being imposed by the US on Russia.

European equity ETPs faced outflows worth US$5.7mn extending the prior week’s trend of outflows as investors took profits ahead of the European Central Bank meeting this Thursday. Given the raft of mixed macro-economic data in Europe, investors will be looking out for further guidance on its asset purchase program.

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This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (“ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (the “FCA”).

The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change.

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Broad commodity basket ETPs took the lion’s share of flows

Broad commodity basket ETPs took the lion’s share of flows

ETF Securities – Broad commodity basket ETPs took the lion’s share of flows

Highlights

  • Diversified commodity basket ETPs dominate inflows.
  • Softening momentum in global manufacturing data sparked outflows from copper, aluminium and industrial metal basket ETPs.
  • Outflows from gold ETPs rose for the fifth consecutive week amidst a strong US dollar.
  • Crude oil ETPs faced another week of outflows as higher inventory data caused oil prices to decline.

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Inflows into diversified commodity basket ETPs, totalling US$92.5mn surged to their highest level since May 2016. Rising volatility across global financial markets in conjunction with supportive fundamentals for most commodities favours the case for diversifying a portfolio.

Softening momentum in global manufacturing data sparked outflows from copper, aluminium and broad industrial metal basket ETPs worth US$28.9mn, US$11.1mn and US$14.8mn respectively. The decline in Chinese Purchasing Managers Index (PMI) for the manufacturing sector to its lowest level since July 2016 appears to have stoked concerns of future demand for industrial metals, coupled with weaker manufacturing PMI data across US, Europe and UK. Added to that, copper production in Chile, home to the world’s largest copper mining producer, rose 6.3% over the prior year in January providing evidence of rising copper supply. The imposition of trade tariffs by President Trump on steel and aluminium imports generated volatility across industrial metals prompting outflows from industrial metal basket and aluminium ETPs for the first time in three weeks. Nickel ETPs bucked the trend, by recording inflows of US$9.4mn owing to expectations of demand from battery technology.

Outflows from gold ETPs amounting to US$93.8mn rose for the fifth week in a row amidst a strong US dollar. In the first nine weeks of 2018, the overall trend of gold ETP flows has largely been negative. Last week marked the fifth consecutive week of gold ETP outflows as the US dollar strengthened in the aftermath of Federal Reserve chairman Jay Powell’s optimistic view of the US economy and upward trajectory of interest rates. Meanwhile, precious metal basket ETPs garnered inflows worth US$11.1mn for the fifth consecutive week.

Crude oil ETPs faced another week of outflows worth US$15.8mn. Since the start of 2018, there has only been one week of inflows into crude oil ETPs highlighting the ensuing pessimism amongst ETP investors, who have been opportunistically selling into the price rally that began around June 2017. Last week, crude oil prices came under significant pressure owing to an unexpected sharp increase in US crude oil stocks in conjunction with the firmer US dollar. Added to that, weaker manufacturing data in China, known to be the world’s largest crude oil importer, amplified risk aversion amongst investors. The drop in OPEC production to a 10-month low in February failed to counteract the bearish sentiment since it is largely attributable to temporary production shortfalls in Venezuela.

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This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (“ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (the “FCA”).
The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the FCA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

 

2018 ETP flows pick up right where 2017 left off

2018 ETP flows pick up right where 2017 left off

ETF Securities – 2018 ETP flows pick up right where 2017 left off

Highlights

  • Global equity ETPs garnered US$21.6mn buoyed by a synchronised global growth story.
  • Gold ETPs received inflows of US$19.2mn led by higher gold prices, having gained support from a weaker US dollar.
  • Outflows worth US$14.1mn from crude oil ETPs mark a continuation of last year’s trend of outflows.

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Gold ETPs received inflows of US$19.2mn, staging a strong start to the new year. Gold prices ended the week higher by 1% supported by a weak US dollar. While the rise in US payrolls missed estimates by a considerable margin of 42,000 workers in December, owing to a shortfall in the services sector, it is unlikely to be a significant shift in the overall trend. The US ADP employment data showed private employers added 250,000 jobs in December, marking the biggest monthly increase since March last year. The accomplishment of passing the US tax bill is also likely to benefit US corporate earnings. We continue to expect the Fed to hike in March. Moreover the December FOMC minutes released last week, highlight concerns of higher inflation expectations in 2018 stemming from wage growth. The likelihood of higher inflation should keep the Fed on track with its three rate hike projections in 2018 and is likely to be a headwind for gold prices going forward.

Global equity ETPs garnered US$21.6mn buoyed by a synchronised global growth story. Strong economic data in US, Europe and China has helped reinforce the positive sentiment helping global stock markets attain new highs. In addition, the cut in the US corporate tax rate has boosted expectations for corporate earnings that kick off this week.

Precious metal ETPs garnered strong inflows worth US$18.8mn. Palladium prices rose to US$1100 for the first time in 17 years, in continuation with last years trend. Fears of a supply shortage continue to drive palladium prices higher. However we expect to see its closely traded counterpart platinum outperform palladium, owing to its steep price discount and the strengthening European car market.

Crude oil ETPs saw outflows of US$14.1mn, extending last year’s trend of relentless outflows. Fears of political unrest in Iran disrupting oil supply coupled with OPEC’s high compliance with production cuts helped push Brent crude above US$68, its highest level since May 2015. Meanwhile positive economic data across the globe and severe cold weather conditions in the US sent WTI crude oil just shy of its 2015 high. Evident from the build-up in short positioning of crude oil ETPs, investors are increasingly becoming aware that current prices are unsustainable as the US continues to expand production and the unrest in Iran settles.

Diversified basket ETPs received US$12mn as major commodities kick start the year with a strong performance. The Bloomberg commodity spot index, known to track a broad basket of 22 major commodities, attained its highest level since 2014. The improving global growth story is benefiting the outlook for commodities and drawing investors into broad based diversified commodity baskets.

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This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (“ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (the “FCA”).
The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

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This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

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Political risk drives precious metal inflows

Political risk drives precious metal inflows

ETF Securities Weekly Flows Analysis – Political risk drives precious metal inflows

  • Precious metals inflows (US$126mn) continue for a second week on rising political uncertainty
  • Technology ETPs drive global equity inflows of US$30mn
  • Dollar Buying; Euro Selling
  • Industrial Metals reverse outflows from last week

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Precious metals inflows (US$126mn) continue for a second week on rising political uncertainty. Gold (US$50mn) and Silver (US$73mn) ETPs had another strong week of inflows. The main catalyst has been the increasing political tension in the US, starting with President Trump’s dismissal of his FBI director and then culminating with congress appointing a special prosecutor to investigate possible Russian involvement in the US election. With some questioning whether the Trump administration can survive its full-term, safe haven assets such as bonds and precious metals rallied last week. Silver ETPs continue to see investor interest as the gold-silver price ratio still looks elevated relative to recent history. We continue to have a favourable view on silver fundamentals as production has fallen in recent years creating a supply deficit. Silver production, including mine production and scrap, fell 32.6 million ounces between 2015 and 2016.

Technology ETPs drive global equity inflows of US$30mn. The previous weekend saw an unprecedented global cyber-attack which impacted both public and private computer systems in up to 74 countries. On the back of this both the Cyber (US$13mn ) and Robo (US$16mn ) ETPs saw strong inflows last week. The Tech sector more generally continues to lead equity performance, as tech earnings in the US have come in better than expected. 82% of Tech companies have so far beat estimates, one of the strongest sectors in the S&P 500.

Dollar Buying and Euro Selling. The US Dollar index (DXY) has had its worst week in ten months as the political tumult in the US sent bond yields lower. Nevertheless, the USD ETP had inflows of US$8mn last week as investors took the opportunity to buy the US Dollar ahead of the June Federal Reserve Meeting in three weeks’ time. Currently the futures market is assigning nearly 100% probability to a hike at the meeting. The primary buying came against the Euro which broke the 1.10 EUR level following President Macron’s inauguration. Since April, there have been five straight weeks of inflows in the USD ETP since mid-April, totalling US$50mn.

Industrial metals reverse outflows from last week. There were US$21mn into the Industrial Metals basket ETP and US$11mn into the Copper ETP following China’s announcement last week that it would invest an additional US$20bn to the Silk Road Fund which seeks to boost infrastructure and trade links with the rest of the world. In contrast, the China A-share equity ETP saw US8mn of outflows as tighter liquidity conditions continues to drag on the A-share market which is down -1% YTD.

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

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