Assets in gold-backed ETPs fell 31 metric tons yesterday to 2,043.09 tons, the lowest level since Aug. 10, according to data compiled by Bloomberg from 10 providers. That’s the biggest drop in percentage terms since October 2008, the data show. Holdings have shrunk 3.4 percent from the record 2,114.6 tons on Dec. 20....
“Strong economic data has improved confidence about the global outlook and reduced the need to hold gold and silver as a safe haven against credit risk, event risk and currency weakness,” Standard Chartered Plc said in a weekly report dated Jan. 25. “We expect further weakness in both markets.”...
Gold has fallen from its leadership role in commodities for the first time since mid-2009, giving way to cyclical commodities such as oil, Goldman Sachs Group Inc. analyst Jeffrey Currie wrote in a Jan. 24 report. “The U.S. economic recovery has shifted onto a much more solid footing,” he wrote.
The article also notes that inflows were solid last year, but far less than those in 2009. This differential is expanded upon in a Wall Street Journal article excerpting from the World Gold Council's 2010 Investment Digest report.
Inflows into exchange-traded funds and other products backed by gold reached 361 metric tons during 2010, the World Gold Council said. That compares to inflows of 617 metric tons for 2009, the largest on record, it added.Interestingly, jewelry demand rose 18% despite higher gold prices. Perhaps some of the rise is "because of," which would meant that jewelry and investment demand are blending together.
Total holdings reached 2,167 metric tons, worth about $98 billion as of Dec. 31, a new high for holdings, the trade group said.
"This all seems to indicate that ETFs have become a convenient and cost-effective route to access the gold for investors in multiple markets," analysts at the World Gold Council said.
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