NEW YORK (Commodity Online): Rising inflows into exchange traded funds are giving the much-needed support for gold after it has fallen from record high of $1923 levels in September. In October gold ETF inflows were positive while most other commodities saw outflows.
The world's largest gold ETF, SPDR Gold Trust (NYSEArca: GLD) has risen 1.82 percent on week to $173.96 after reaching a high of $174.98 while Market Vectors Gold Miners ETF (NYSEArca: GDX) has risen 1.64% on week to $62.31 while iShares Gold Trust (IAU) has risen marginally to $17.44 and ETFS Swiss Gold (SGOL) climbed 1.83% to $177.37.
Precious metals ETFs continued to attract investors on Eurozone detb worries with GDX which has holdings in top gold miners, Barrick Gold, Goldcorp and Newmont rebounding in the weekend.
According to BlackRock, US and European investors put $1.948 mn into precious metal ETFs in October while ETF Securities have put the global fiture at $1.492 bn.BlackRock said strong gold flows into U.S.-listed ETPs had continued in the first week of November, at about $1.4 billion.
The ETF rush
The recent rally in gold, which reached but failed to breach 1,800 dollars per ounce, has been supported by a renewed pick-up in interest for Exchange Traded Products trading gold. Total known holdings calculated by Bloomberg have risen by 66 tonnes from the October low to 2,310 tonnes which is only 20 tonnes from the peak seen back in August. ETP investors are generally viewed to have a much longer investment horizon as the product is non-leveraged, unlike futures which are favourites among hedge fund traders, according to Ole S Hansen, Senor Commodity Strategist at Saxo bank
During the 15 percent correction that hit gold back in September investments in gold ETP’s only saw a 3.7 percent reduction totalling 86 tonnes with investors generally not forced or inclined to pull out of what had been a very profitable trade. The ETP market therefore seems to be telling us that investors are positioning themselves for the next push higher but with so many fresh longs having been established in a relative short period of time technical traders could be tempted to drive it lower in order to check the strength of support. Look for consolidation between 1,680 and 1,802 with an eventual break in either direction setting up the next 100 dollar move, according to Ole S Hansen of Saxo Bank
