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GLD Gold Reserves Show Net Positive Investment Flows In Q1

By Kitco News
Wednesday April 1, 2015 12:48 PM

(Kitco News) - Investor demand for gold ended the first quarter of 2015 in positive territory, despite significant declines in March, according to the latest data from SPRD Gold Shares (NYSE: GLD), the world’s biggest gold-backed exchange-traded product (ETP).

Data compiled by the ETP shows that, as of Tuesday, investor inflows boosted its gold reserves by 28.22 tonnes to 737.24 in the first three months of the year. The quarterly rise is an increase of almost 53% compared to the first quarter of 2014, which saw positive flows of 18.46 tonnes.

Image courtsey of World Gold Council

However, most of the gains made so far this year came in January. The GLD data shows that investor flows were negative in March as its gold reserves declined by 26.25 tonnes, the biggest monthly decline since December 2013.

Analysts have noted that gold demand was strong at the start of the year on safe-haven flows as investors sought to protect themselves against geopolitical uncertainty and global central banks loosening their monetary policies on mass.

January inflows saw GLD’s reserves jump by 49.35 tonnes to 758.37, the highest monthly increase since July 2011. February appears to be the transition period with relatively neutral investment flows as GLD’s gold reserves increase by 4.5 tonnes.

However, half of those gains were erased in March as investors prepared for the Federal Reserve eventually hiking rates in 2015. According to analysts, the anticipation of a rate hike, in either June or September, boosted the U.S. dollar and bond yields, making gold an unattractive investment.

Commodity analysts at Barclays said in a recent research note that although investment flows are still positive for the year, the bulk of those positions are showing negative returns. They continue to remain bearish on the gold price, expecting investors to eventually exit their losing positions.

On the other hand, analysts at UBS said in a recent note that according to their research, investors have become less bearish on the gold market and as a result the Swiss bank said that it is expecting to see significant EFT selling moving forward.

“We maintain the view that the bulk of the selling has likely already occurred, and those who are still holding on to their positions have higher pain thresholds and longer investment horizons – we estimate a modest increase in gold ETFs this year,” they said.


By Neils Christensen of Kitco News; nchristensen@kitco.com
Follow Neils Christensen @neils_C



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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