Market Nuggets
BMO: ETF Outflows Occur As Gold Remains Under Pressure
Holdings of gold by the world’s exchange-traded funds have fallen by 4.5% since their May high as the precious metal weakened, says BMO Capital Markets. Gold on Monday fell below $1,200 an ounce and went on to its weakest price since last year, with the market selling gold in response to U.S. dollar strength rather than buying as a safe haven with Turkey “teetering on the edge of crisis,” BMO says. “Gold has been under considerable pressure recently, with ETFs tracking the yellow metal recording large outflows,” BMO says. “For example SPDR Gold Shares, which makes up a third of the bullion-backed ETF market, has seen $1.96 billion in outflows, 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 Trading Commission on Friday show a record net-short position among speculators.
By Allen Sykora of Kitco News; asykora@kitco.com
Commerzbank: Technical Selling, Physical Buying Could Emerge In Gold
Tuesday August 14, 2018 08:18
Gold prices are in territory where a further dip could trigger technical selling but might also prompt bargain hunting by physical buyers, says Commerzbank. Spot metal fell below $1,200 an ounce Monday for the first time in nearly 1½ years and remains below this so far Tuesday morning. “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 if it does begin, the gold price would presumably fall even further. That said, prices below $1,200 sparked increased buying interest in the past, especially in Asia.”
By Allen Sykora of 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 look for the yellow metal to recover if market participants fear the global economy may fall into a recession, says Hussein Sayed, chief market strategist at FXTM. The metal on Monday fell below $1,200 for the first time since March 2017. “The precious metal has been in a downtrend trajectory since mid-April and has lost 12% from previous 2018 highs as the dollar managed to strengthen against all EM currencies,” Sayed says. The strategist notes that gold is showing a close correlation with EM currencies, especially the Chinese yuan. “This is mainly because emerging markets are the biggest consumers of physical gold, particularly China and India,” Sayed continues. “The further these currencies drop, the less purchase power consumers have; as long as investors believe we won’t see a crisis similar to 2008, the dollar and the yen will continue to be the safest plays. However, the moment investors believe that the situation will get out of control and the global economy will fall into a deep recession, gold’s luster will return.”
