Tag Archives: Gold Trust

Gold ETFs Fuel Selling as Prices Try to Hold $1,400

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Physically-backed gold exchange traded funds are used by investors as an easy alternative to buy the metal within the equities markets. However, the innovation in ETFs can also add to the selling pressure on gold.

“The ETF revolution set expectations very high and brought a lot of liquidity at first” to the commodity markets, said Kevin Kerr, president and chief executive officer of Kerr Trading International. “After all, the ETFs were much more palatable to the average equity investor who wanted to steer clear of futures or physical gold and silver.”

Gold ETFs that hold the physical metal were credited for taking the commodity market to record highs over the past five years, reports Myra P.Saefong for MarketWatch. Gold prices recently dipped to the lowest levels seen in two weeks, at $1,421 per ounce, leading shares of the largest gold exchange traded fund SPDR Gold Trust (NYSEArca: GLD) down 2%. [Gold ETF Outflows Persist After Fed]

To date, gold futures are down 15%, with April witnessing an 8% drop. Large banks have lowered gold forecasts, which led to an outpouring of assets in gold ETFs, in addition to prior losses in gold ETF outflows earlier in the year. [Gold ETFs Contribute to Bullion Price Slide]

The outflows in gold ETFs have left some investors burned. The easy access that gold ETFs awarded the average retail investor was a huge advantage, however, the losses recently incurred are indicative of how much harm can be done when individual investors put capital into asset classes not intended for the masses or the inexperienced. [Gold ETF Asset Flows are a New Market Indicator]

“Investors are disenchanted with the commodity ETFs and the great promise they held when they were launched,” said Kerr. “Damage has been done by the ETFs as they have dissuaded many investors from the resource space due to losses.”

The iShares Gold Trust (NYSEArca: IAU), the second-largest gold backed ETF, has suffered a loss of $766.4 million in April alone, compared to GLD that lost $6.77 billion in the month of April.

SPDR Gold Trust

Source: http://www.etftrends.com/2013/05/gold-etfs-fuel-selling-as-prices-try-to-hold-1400/

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Can GLD’s Rebound Weather FOMC Minutes?

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The bulls are at it again this week as stimulus hopes have taken center stage at home and in the eurozone. Investors on Wall Street continue to digest corporate earnings results, which for the most part are coming in better-than-expected; however, looming FOMC minutes and Friday’s monthly employment report will surely steal the spotlight this week. Overseas, investors are anticipating for the European Central Bank to cut rates down to 0.5% from 0.75%, potentially paving the way higher for gold prices as inflation fears return.

Chart Analysis

Consider the one-year daily performance chart for the well-known SPDR Gold Trust (GLD) below. This ETF endured a nasty sell-off spanning from 4/12 to 4/15 after massive profit taking pressures swooped in and inevitably triggered countless stop-loss orders along the way; note that the blue line in the chart signifies GLD’s historic support around $150 a share, and as you can see, the downside damage was only exaggerated as prices dipped below this closely watched support level.

GLD’s rebound over the last two weeks has been encouraging for precious metals investors, but the rally may soon run out of steam when considering the prevailing trading volumes; notice how the big down days were accompanied by above-average trading volumes, while the recent rebound has seen declining volumes, perhaps hinting at a potential trend reversal in the near future.

The upcoming FOMC minutes at home and the expected European Central Bank rate cut will serve as fundamental catalysts for GLD as investors will surely look to re-position their portfolios following any policy changes. Any hints of continued easing and “loose money” policies should bode well for gold as inflation fears return. On the other hand, any mentions of improving economic conditions could hinder GLD’s performance on the day, as investors jump ship to riskier assets [see 5 Commodity Trading Mistakes You Could Be Making].

Source: http://commodityhq.com/2013/can-glds-rebound-weather-fomc-minutes/

Gold ends lower, copper jumps 7% on U.S. jobs data

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Gold futures finished with a modest loss on Friday as better-than-expected U.S. employment figures dulled the precious metal’s safe-haven appeal.

For the week, however, gold found support from the European Central Bank’s decision to cut interest rates and from strength in physical demand to end the week 0.7% higher.

Copper futures rallied nearly 7% for their biggest one-day percent gain in over two and a half years, as the jobs data brightened demand prospects for the industrial metal.

Gold for June delivery GCM3 +0.73% fell $3.40, or 0.2%, to settle at $1,464.20 an ounce on the Comex division of the New York Mercantile Exchange.

The July silver contract SIN3 +0.65% climbed 18 cents, or 0.8%, to end at $24.01 an ounce, up 1% from a week ago.

The U.S. economy created a net 165,000 jobs in April, the Labor Department said Friday. The number surpassed the 135,000 forecast of economists polled by MarketWatch. The acceleration in hiring nudged the unemployment rate down to 7.5%, the lowest level since December 2008.

Right before the data’s release, gold prices were trading around $13 an ounce higher than Thursday’s close, then after the data they fell to trade around $10 lower.

If hiring continues to rise at the current pace for the next two to three months, that would be “bearish for safe havens like gold and silver,” said Chintan Karnani, an independent bullion analyst based in New Delhi.

U.S. jobs picture picks up steam

The U.S. unemployment rate dropped to 7.5% in April, as the jobs picture continued to improve. Rolfe Winkler, Phil Izzo and Sudeep Reddy look at the numbers and the economic outlook.

Only the interest-rate cut by the European Central Bank and firm physical gold demand in Asia are supporting gold prices, he said.

Bullion dealers reported impressive jumps in April gold bullion sales.

Will Rhind, managing director of ETF Securities, a provider of physically backed precious-metal ETFs including the ETFS Gold Trust SGOL +0.16% , said “demand is mainly being seen by coin/bar merchants and gold dealers (bullion banks) that act on behalf of central banks and other large institutional physical players.”

Copper rally

Copper for delivery in July HGN3 -0.38% jumped 21 cents, or 6.8%, to a three-week high of $3.315 a pound. It rose roughly 4% for the week.

Friday’s percentage gain was the largest since at least October 2011, according to FactSet data.

Source: http://www.marketwatch.com/story/gold-futures-higher-ahead-of-us-jobs-data-2013-05-03