The recovery in gold prices has lost steam in recent sessions as bullion-backed exchange traded funds continue to bleed assets. For example, physical gold holdings in metal ETFs such as SPDR Gold Shares (GLD) have declined to a four-year low.
“There’s continuous liquidation on the ETFs which keeps gold under pressure. Sentiment is not that good,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers, in a Reuters article.
Bullion holdings in GLD fell to about 1,058 metric tons on Tuesday, the lowest since early 2009. [Gold ETF Asset Flows are a New Market Indicator]
So far this year, the world’s largest gold ETF has experienced net redemptions of $14.4 billion, according to IndexUniverse flow data.
“There’s a lot of betting against gold going on,” said Ben Traynor, chief economist at BullionVault, in a MarketWatch report.
“Professional money managers have built up a sizeable short position,” he said. “At the same time, the ETFs continue to lose metal, which makes would-be gold investors circumspect.”
SPDR Gold Shares
Full disclosure: Tom Lydon’s clients own GLD.