Gold ETF sales continue in May

Gold sales through exchange-traded products came to $6 billion last month as investors put more money into stocks and bonds, ETFGI Ltd. said.

The outflow for gold in May pushed the total for the first five months this year to $24.2 billion, compared with gains of $3.2 billion for the same period last year, according to data provided by e-mail from London-based ETFGI. Commodity outflows were $6.7 billion last month compared with $25 billion added to stock ETPs and $3.1 billion in fixed income.

Gold outflows came on top of an $8.8 billion cut in April when the metal slid to a two-year low and entered a bear market. BlackRock Inc. said the April gold sales were a record. Investors cut gold-backed ETP assets that reached an all-time high in December as faith in the metal as a store of value waned after inflation failed to accelerate and confidence mounted that the U.S. economy was improving.

Gold prices that rallied for 12 years in the best run in at least nine decades are down 16 percent this year while U.S. equities climbed to a record.

The S&P GSCI gauge of 24 commodities dropped 2.7 percent this year and the MSCI All-Country World Index of equities gained 6.9 percent. Treasuries are down 1.2 percent, a Bank of America Corp. index shows.

Commodity ETP outflows last month were down from $9.4 billion in April, according to ETFGI, which is managed by Deborah Fuhr, formerly of BlackRock. All ETP assets climbed to a record $2.14 trillion last month, ETFGI said.


Gold Traders Split With Bullion Nearing Bear Market: Commodities

Gold traders are split on whether bullion will plunge into its first bear market since 2008 as economies improve or rally as central banks buy more debt.

Twelve analysts surveyed by Bloomberg expect prices to rise next week and the same number were bearish. A further three were neutral. Gold slumped to a 10-month low of $1,540.29 an ounce yesterday and investors sold $9.7 billion from exchange-traded products since their holdings reached a record Dec. 20. Hedge funds cut bets on higher prices by 70 percent since October.

Gold’s 12-year bull rally is probably ending as the U.S. leads a global economic recovery, according to banks from Credit Suisse Group AG to Goldman Sachs Group Inc. Commerzbank AG says it’s too early to call an end to the rally and Standard Bank Plc forecasts prices will climb this year as central-bank stimulus and record-low interest rates spur demand for a protection of wealth. The Bank of Japan said yesterday it will double monthly bond buying to bolster the economy.

“The main driver behind gold’s weakness this year has been the focus on global growth and that’s meant rotation out of defensive assets like gold,” said Joni Teves, an analyst at UBS AG in London. “There’s this weak sentiment and it’s been feeding on itself. Central banks continue to pursue exceptionally loose monetary policies and create a still supportive environment for gold.”

Gold Price

The metal fell 6.4 percent to $1,567.55 in London this year. A close at $1,520.18 would be a 20 percent drop from the peak reached in September 2011, the common definition of a bear market. The Standard & Poor’s GSCI gauge of 24 commodities dropped 2.8 percent this year, and the MSCI All-Country World Index (MXWD) of equities gained 4.3 percent. Treasuries are little changed, a Bank of America Corp. index shows.

Gold rose as much as 1.3 percent today after a Labor Department report showed U.S. employers hired fewer workers than forecast in March and a slump in the size of the labor force pushed the jobless rate down to a four-year low of 7.6 percent.

Bullion retreated as Federal Reserve policy makers debated the pace of $85 billion of monthly asset purchases and as U.S. equities reached a record. U.S. economic growth will accelerate from the third quarter though mid-2014, according to the median of as many as 74 economist estimates compiled by Bloomberg. The International Monetary Fund is predicting global growth of 3.5 percent in 2013, from 3.2 percent in 2012.

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Gold nears bear market

Gold futures for June delivery fell 0.1 percent on Thursday to settle at $1,552.40 an ounce at 1:37 p.m. on the Comex in New York

Getty ImagesGold futures for June delivery fell 0.1 percent on Thursday to settle at $1,552.40 an ounce at 1:37 p.m. on the Comex in New York

Gold dropped to the lowest since May, nearing a bear market, on signs that investors are seeking higher returns in equities as the global economic recovery cuts demand for haven assets. Palladium fell the most since October.

Global holdings of exchange-traded products backed by gold are down 7.4 percent this year, data compiled by Bloomberg show. Prices have fallen 7.4 percent this year, while the MSCI All- Country World Index of equities advanced 5 percent. The metal may continue to decline as the resilience of the financial system to recent developments in Italy and Cyprus suggests reduced risk of a so-called major meltdown, Credit Suisse Group AG said yesterday.

“Equities continue to attract more capital,” David Lee, a vice president at Heraeus Precious Metals Management in New York, said in a telephone interview. “The safe-haven premium for gold also seems to have disappeared with the world not falling apart.”