Traders Still Bearish on Gold ETFs
This article was originally published on ETFTrends.com.
The SPDR Gold Shares (NYSEArca: GLD) and other gold exchange traded products are trying to avoid a sixth consecutive month of losses this month. Some data points suggest that could be a difficult task for bullion.
Since gold slid through the $1,200 per ounce area in August, traders have not been shy about departing ETFs like GLD.
“Over that same period investors have meantime liquidated more than 5% of the SPDR Gold Trust (GLD), the largest gold-backed ETF vehicle, taking the quantity of bullion needed to back its shares in issue 42 tonnes lower,” according to BullionVault.
Recent data points suggest professional speculators have been boosting short positions in gold. Money managers are still betting on further weakness in the gold market as many have increased net-short positions to a record for a fifth straight week. Analysts at Citigroup Global Markets argued that there isn’t a lot of demand for gold in a world where yields and equities are rising.
Other Challenges
Investors' appetite for physical gold holdings is also waning.
“The US precious-metals market faces 'unprecedented low levels of activity that continue to persist,' says Greg Roberts, CEO of US bullion bar and coin wholesaler A-Mark Precious Metals,” reports BullionVault.
Related: A Physical Gold ETF Backed by The Perth Mint
Looking ahead, gold and other precious metals may continue to face an uphill struggle as the Federal Reserve is expected to keep hiking interest rates, which makes non-yielding assets like commodities less attractive. Sales of gold coins from the U.S. mint are also falling this year.
“Year-to-date, sales of brand-new gold American Eagle coins have fallen by one-fifth from the same period in 2017, data from the US Mint show,” according to BullionVault.
For gold to muster a credible near-term rebound, the dollar would need to weaken or inflation data would need to increase.
For more information on the gold market, visit our gold category.
Tom Lydon’s clients own shares of GLD.
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