ETF Securities reports gold ETPs bounced back last week
In this week’s ETF flows report Aneeka Gupta, Associate Director, Equity & Commodities Research at ETF Securities by WisdomTree, reports that inflows into gold ETPs worth USD73.3 million bounced back reversing the prior two weeks of outflows as bargain hunters appeared to chase lower prices.
Gold prices ended the second quarter at USD1252.60 per troy ounce, its lowest level in nearly six months. Despite the ongoing geopolitical tensions, trade wars and the correction in global stock markets, gold historically known for its safe haven status, has failed to benefit from the risk-off environment.
Gupta writes: “This makes logical sense as gold has always been associated with being a long-term form of insurance as opposed to a knee-jerk safe haven against short term market volatility. A persistent and long term correction in the equity markets is likely to lend buoyancy to gold prices. So far in 2018 the strong US dollar, against the backdrop of the rising rate environment in the US, has underpinned most of the weakness of gold prices owing to their counter cyclical relationship. Sentiment towards gold remains very weak, however last week’s inflows suggest investors are positioned for a turnaround in gold prices.”
Outflows from crude oil ETPs rose to USD21 million last week extending the trend of outflows for the second consecutive week as profit takers appeared to be lured by higher oil prices.
“Oil prices rose sharply last week as a result of further supply outages, falling US stockpiles and reports that the Trump administration was aiming to shut down all Iranian crude exports by November 4. Record high crude oil processing coupled with a marked rise in US crude oil exports were the key reasons for the unexpected sharp fall in US crude oil stocks by 9.9 million barrels last week as reported by the US Department of Energy (DOE),” Gupta writes.
“The price differential between Brent and WTI narrowed further from USD10 to USD5 per barrel owing to current outage of an oil production facility in Canada’s Alberta oil province. The facility has a production capacity of nearly 350,000 barrels per day ad is likely to remain out of operation until the end of July resulting in less crude oil from Canada reaching the US. As the narrowing of the price differential between Brent and WTI, reduces the attractiveness of US exports, we expect US crude oil stocks to remain elevated in the coming months.”
Industrial metal basket ETPs faced redemptions worth USD38.9 million for the second week in a row as ongoing trade tensions weakens sentiment. Industrial metal prices continued to meander amidst the ongoing trade wars. The Trump administration announced it would be pushing forward with its plans to restrict Chinese investment in the US but it would restrain from implementing its harshest measures. Meanwhile outflows from copper ETPs worth USD31.8mn continued for the third week in row, rising to their highest level in 39 weeks.
Long Yen short Euro pair received the highest inflows worth USD9.1 million in six weeks, after the European Union leaders reached an agreement on migration at the EU summit. Gupta writes that bargain hunters appeared to drive inflows into long Yen short Euro linked ETPs as the Yen declined 0.94 per cent versus the Euro last week subsequent to the news that the European Council (EUCO) reached the all-important EU immigration agreement.
Outflows from US Dollar ETPs worth USD15.9 million rose to their highest level in 20 weeks.