Chicago -- (Kitco News) --The world’s largest gold exchange-traded fund – SPDR Gold Trust – saw one of the biggest one-day outflows in more than two years on Wednesday as speculators continue to exit gold as prices fall.

Both Barclays Capital and Commerzbank both noted on Thursday that the SPDR Gold Trust saw outflows of roughly 18.5 metric tons on Wednesday. That compares to recent total outflows for all ETFs of about 20 tons. In just one day, the speculative selling in one ETF nearly matched the total amount of gold sold in all ETFs in months.  Barclays said Thursday that ETF holdings in all funds now have fallen to 2.071.5 tons.

Commerzbank said Thursday athe drop of 18.5 tons is the biggest daily outflow since the beginning of April 2008 and contrasts with developments in the second-quarter where inflows were heavy.

The outflows coincide with the price drop gold suffered earlier this week when it broke through support in the $1,180-$1,175 an ounce area. Gold so far has not advanced its losses and is trading around $1,166.20 on Thursday.

The action on Wednesday underscores the drop in speculative positions as reported by the Commodity Futures Trading Commission’s weekly commitment of traders data. In its report from July 23, net fund long positions on the Comex division of the New York Mercantile Exchange fell to its lowest level since March, 26,600 contracts, said Barclays earlier this week. They said non-commercial positions as a percentage of open interest is down to 32%, the lowest level since December 2008. This comes as open interest in July has fallen about 10% so far.

It’s likely new CFTC data due out Friday will show more shedding of long positions by speculators as the report will include Tuesday’s sharp break.

Analysts said it’s not surprising to see some speculative investors leave gold, especially if they bought at the top or any time this year. With the price break, gold is trading at its lowest prices of 2010, so if someone bought this year they’re holding losing positions. If price break further it could speeding further selling, analysts said.

Physical buying is expected to come in now that prices are lower, but that’s not likely to happen during these seasonally slow times.  “Although we expect physical demand to set the floor for prices, if longer-term interest also starts to turn negative, gold prices could struggle to gain traction over the forthcoming weeks.” Barclays said.

Perhaps gold has found some near-term support. Prices have not weakened beyond the break earlier this week and George Gero, vice president of RBC Capital Markets Global Futures noted futures open interest has started to again and as the market gets ready for first notice day for the August futures, positions are being rolled to the December contract, rather than the nearby October. That suggests longer-term holders “are still evident in gold and (that) dips could bring more bargain hunters,” he said.

He said Wednesday’s rollover resulted in “huge volume.” Of the 61,000 contracts in August, 7,511 were rolled into October contracts and 32,861 in December, and a net loss of 21,000 contracts. He said the loss of futures contracts and the loss in the ETFs likely was “spread to other opportunities and asset allocations,” he said.

By Debbie Carlson; dcarlson@kitco.com

Editor’s Note: Meet the Kitco News Team at the upcoming Kitco Metals eConference September 12-13, 2010. A not-to-be missed event featuring Ron Paul, Marc Faber and other industry heavyweights. The eConference is free with Pre- Registration www.kitcoeconf.com.

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