After the bout of market volatility, investors have dipped their toes back into the relative safety of the bullion market, driving assets into precious metals, with the largest gold-related exchange traded fund set for its first monthly inflow of the metal in over a year.
The SPDR Gold Shares (GLD) , a physically backed commodity fund, has raised its gold reserves by 10.5 tons so far this month, moving toward its first monthly increase since December 2012, reports Jan Harvey for Reuters.
According to the World Gold Council and Thomson Reuters GMFS, gold-backed ETFs saw physical bullion inventories shrink by 881 tons, with GLD’s holdings falling by over 550 tons.
Gold prices experienced a precipitous drop in 2013 after the Federal Reserve hinted at tapering its bullion dollar monthly bond purchasing plan, which supported gold prices on low interest rates, a weaker U.S. dollar and inflationary fears.
However, the positive factors, like a weaker economic data that has weighed on tapering talks and heightened market volatility induced by the emerging markets, have counterbalanced the negative factors so far this year. [Safe-Haven Interest Supports Gold ETFs; Bullion Prices at 16-Week High]
“Some negatives are still there for the gold price, but they’ve been heavily obscured by positives since the start of the year,” Natixis analyst Nic Brown said in the article. “You’ve had bad weather, which has led to substantially weaker U.S. economic data. That has gone hand-in-hand with lower U.S. interest rates, and a weak dollar.”
Spot gold prices are up a little over 10% so far this year and 7% in February, the metal’s best monthly performance since July 2013. Gold currently sits around $1,332 per ounce.
The SPDR Gold Shares ETF has gained 10.3% year-to-date and is up 4.8% over the past month. GLD is currently testing its 200-day exponential moving average.
SPDR Gold Shares
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Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own shares of GLD.