Gold ETPs saw their largest weekly outflows in over six months during the week beginning 26 June in response to hawkish comments from the European Central Bank (ECB) and the Bank of England (BOE), as well as the release of higher than expected inflation data in Germany, according to the weekly flows analysis from ETF Securities.
ETF Securities reported weekly outflows of $160m from its gold ETPs.
The firm’s ETPs tracking the precious metal saw $160 million of outflows in a week that also included a sovereign bond sell off and rising risk appetite as investors raised their expectations of the pace of monetary policy normalisation.
Morgane Delladone, fixed income strategy, ETF Securities, commented: “In January 2017, we published our forecast for the gold price at $1230/oz by year-end. We remain largely on track with that trajectory, with gold falling below $1250 last week.
“With the gradual rise of global yields, we believe that gold prices will continue to trend down, although the downside risk for gold prices will be contained by the gradual nature of rate increases and on-going tail risks. While the US dollar has been soft recently relative to other currencies, a rising rate environment will be US dollar positive and gold price negative in the second half of the year.”
ETF Securities offers an inverse gold ETP, the ETFS 1x Daily Short Gold (LON: SBUL), and an inverse triple leveraged gold ETP, the ETFS 3x Daily Short Gold (LON: 3AUS), for investors looking for a tactical play on the gold price moving lower. Each ETP has a total expense ratio (TER) of 0.98%.
Despite a recent poor run, which has seen outflows of $294m from gold ETPs during June, overall flows are still up by $1.3 billion over the past twelve months.
Elsewhere in commodities, industrial metals ETPs saw inflows of $55m during the week after the release of a stronger than expected reading of the Chinese official Purchasing Managers Index of 51.7 in June versus 51.2 in May. Delledonne commented: “The sub-components of the index suggest that the manufacturing sector was supported by rising demand from abroad as export orders strongly increased, while there are indications of growing domestic demand. Despite improving industrial sentiment, metal price gains were capped at 2.3%, because weak Asian stock markets acted as a counterweight.”
Crude oil ETPs also saw inflows as oil prices gained 6%, with Brent and WTI reaching $47.50 and $44.90 per barrel respectively. Despite a surprise build in US crude inventories, crude ETPs added $24m in net new assets during the week. “The oil price gains were likely resulting from the decline in US crude oil production by 100k barrels per day on the week beginning 19 June,” said Delledonne. “However this is potentially a one-off price shock as it partly reflects the temporary interruption of the production in the Gulf of Mexico during the tropical storm Cindy two weeks ago.”