BMO: ETF Outflows Occur As Gold Remains Under Pressure
Holdings of gold by the world’s exchange-traded funds have fallenby 4.5% since their May high as the precious metal weakened, says BMO CapitalMarkets. Gold on Monday fell below $1,200 an ounce and went on to its weakestprice since last year, with the market selling gold in response to U.S. dollarstrength rather than buying as a safe haven with Turkey “teetering on the edge of crisis,” BMO says. “Gold hasbeen under considerable pressure recently, with ETFs tracking the yellow metalrecording large outflows,” BMO says. “For example SPDR Gold Shares, which makesup a third of the bullion-backed ETF market, has seen $1.96 billion inoutflows, and total ETF holdings have fallen by 4.5% since their peak in May.”Analysts also point out that data from the U.S Commodity Futures TradingCommission on Friday show a record net-short position among speculators.
By Allen Sykoraof Kitco News; asykora@kitco.com
Commerzbank: Technical Selling, Physical Buying Could Emerge InGold
Tuesday August 14, 2018 08:18
Gold prices are in territory where a further dip could triggertechnical selling but might also prompt bargain hunting by physical buyers,says Commerzbank. Spot metal fell below $1,200 an ounce Monday for the firsttime in nearly 1 1/2 years and remains below this so far Tuesdaymorning. “We attribute the price slide primarily to the firm U.S. dollar,”Commerzbank says. “There has been no technical follow-up selling as yet, but ifit does begin, the gold price would presumably fall even further. That said,prices below $1,200 sparked increased buying interest in the past, especiallyin Asia.”
By Allen Sykoraof Kitco News; asykora@kitco.com
FXTM: Gold Would Regain Luster If Investors Fear Global Recession
Tuesday August 14, 2018 08:18
Gold has been weakening with emerging-market currencies, but lookfor the yellow metal to recover if market participants fear the global economymay fall into a recession, says Hussein Sayed, chief market strategist at FXTM. The metal on Monday fellbelow $1,200 for the first time since March 2017. “The precious metal has beenin a downtrend trajectory since mid-April and has lost 12% from previous 2018highs as the dollar managed to strengthen against all EM currencies,” Sayedsays. The strategist notes that gold is showing a close correlation with EMcurrencies, especially the Chinese yuan. “This is mainly because emerging marketsare the biggest consumers of physical gold, particularly China and India,”Sayed continues. “The further these currencies drop, the less purchase powerconsumers have; as long as investors believe we won’t see a crisis similar to2008, the dollar and the yen will continue to be the safestplays. However, the moment investors believe that the situation will getout of control and the global economy will fall into a deep recession, gold’sluster will return.”
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