GLD Gold Holdings Uptick Modestly In 2017; TDS Sees Rise In 2018
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(Kitco News) - SPDR Gold Shares (NYSE Arca: GLD), the world’s largestgold-backed exchange-traded fund, posted a modest inflow of roughly 15 metrictons during 2017.
The figure might look better than it is since the inflow camefrom a low level of overall holdings, pointed out Ryan McKay, commoditystrategist with TD Securities. However, he said TDS looks for those inflows topick up in 2018 as gold prices rise.
Data on the GLD ETF website show that holdings of the yellowmetal to back the shares - which track the price of the commodity but tradelike a stock - stood at 837.5 metric tons as of the end of December. This wasup from 822.17 tons on the final day of 2016.
However, a sharp decline previously occurred near the end of2016 on liquidation-related selling after the election of U.S. President DonaldTrump, perhaps making the rise for 2017 somewhat “misleading,” McKay pointedout. GLD holdings were at 949.69 tons as of Nov. 8, 2016, the day Trump waselected, meaning they then declined nearly 128 tons into the end of that year.
“ETFs were liquidated a lot post-Trump in November-December,”McKay explained.
GLD holdings picked up again in 2017 as gold pricesrecovered, hitting a peak of 867 tons in June, before falling below 800 in Julyand August and then recovering again in autumn. Holdings fell at a time whenthe market started factoring in a more hawkish Federal Reserve, McKay noted.
“ETFs will increase from here,” he predicted.
He described TD Securities as bullish on gold prices onideas that the Federal Reserve will not be as hawkish as policy members have hintedin the past, likely to be held back on monetary tightening due to concernsabout subdued inflation. This may mean pressure on the U.S. dollar, which inturn tends to support gold.
Further, McKay said, there is potential for a pickup in ETFbuying from equity funds that hold only long positions, with this buyingexpected as the result of increased geopolitical and equity-market risks.
“You’re get some demand from there as well,” McKay said.
By Allen SykoraFor Kitco News
Follow @AllenSykora
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