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Haven-buying spurs jump in gold ETF holdings in December

Haven-buying spurs jump in gold ETF holdings in December

January 8, 2019


Holdings in gold-backed exchange traded funds rose by 2.4m ounces, or 76 tonnes, in December as investors looked for safe places to shelter from volatile equity markets.“The inflows over the month . . . were largely split between North American and Europe, each of which increased approximately $2.5bn,” the World Gold Council said in a report published on Tuesday.ETF buying has continued in 2019 with a 500,000 ounces added so far in 2019, according to UBS, which says most of the increase coming from US and UK funds amid uncertainty over Brexit and the outlook for the US economy. In sterling terms, gold is up almost 13 per cent from its October lows.Gold reached a six-month high of around $1,300 a troy ounce last week amid violent swings in equity markets. It has since fallen back to $1,280 following the release of strong employment data that eased fears of a slow down in the US economy.“Despite resistance around $1,300, gold holds on to most of its gains, helped by the US dollar hovering around the low end of the recent range, as well as seasonal demand ahead of the Lunar New Year holidays in China,” said Joni Teves, strategist at UBS.


A weaker dollar is a positive for gold because it makes the metal cheaper for holders of other currencies.On Friday, the chairman of US Federal Reserve Jay Powell said the central bank would be “patient” in deciding on any more interest rate increases, and “wouldn’t hesitate” in pausing its balance sheet shrinkage if it was necessary.“As we have noted before, Fed dovishness should ultimately be supportive for gold, even though it also helps risk [assets],” added Ms Teves.


Source: https://www.ft.com