View more on these topics

Gold funds hit by 12th week of outflows


Investors continued to pull money out of gold exchange-traded products as fears grow that the US could start to gradually withdraw quantitative easing this year.

Figures published by ETF Securities show $93m was taken out of physical gold ETPs last week. This marks the 12th week running that the products have seen outflows, with the total redemptions for this period reaching $1.99bn.

Last week saw Federal Reserve chairman Ben Bernanke confirm that the central bank would consider scaling back the pace of its $85bn-a-month bond-buying programme in the latter half of 2013 if the US economy continues to strengthen.

This led to a global sell-off, with gold being one of the asset classes hit. Gold spot prices suffered a 6.4 per cent fall after Bernanke made his comments.

ETF Securities’ research team says: “The Fed’s announcement of the potential gradual withdrawal of bond purchases later this year has seen a sharp increase in real interest rates and a strengthening of the US dollar, both providing headwinds to gold price performance.”

A recent poll by Bloomberg found that gold traders are at their most bearish since January 2010, with 15 analysts out of 26 surveyed expecting the price of gold to see further falls this week.

ETF Securities adds that copper and platinum ETPs witnessed inflows on last week’s price dips. Investors have added to copper ETPs for three straight weeks, following prices hitting a seven-week low after the Fed announcement.

“Commodity prices dropped together with other cyclical assets as the Federal Reserve’s latest policy announcement prompted panic selling across financial markets,” the research team adds.

“To the degree that the Fed is right and the US economy is on a sustainable recovery path, we expect that once the knee-jerk risky asset sell-off subsides, investors will accelerate their buying of the more cyclical commodities.”


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm