The world's largest specialist gold Exchange Traded Fund, SPDR Gold Trust (formerly known as Streettracks Gold Trust and set up by the World Gold Council), has sold over 32 tonnes of gold in two days on July 22nd and 23rd, as investors liquidated holdings as the gold price fell, says a report from Mineweb.
It said the total held at the end of July 23rd remained at a massive 673.4 tonnes - still well ahead of the holding at the beginning of the month. The fund previously had had holdings of a little over 705 tonnes.
The sell-off demonstrates that even the big ETFs are suffering declines in their gold holdings in the latest gold sell-off precipitated by the sharp fall in oil prices which again, is in turn as western economies are seen to be continuing in decline and consumption likely to fall in the face of increased oil supplies.
The fall off in oil has helped set a firmer tone for the US dollar, but what should be helping gold here is that the firmer dollar makes the likelihood of US interest rate increases weaker. Indeed it may create scope for further reductions in rates to help try and kick start the economy.
With gold seen as a safety net protecting against rising inflation and economic turmoil it may well be that the declines are short-lived, but with gold seemingly tracking oil minute by minute, and the prospect of further falls in the oil price, the worst may not be over yet for gold investors with further short term falls in prospect.
