ETF Securities, a London-based ETF provider, has reported that gold exchange-traded products are currently in favour with investors on the back of continued global political uncertainties. ETF Securities’ Gold ETPs experienced $141m inflows last week, the highest of any sector they cover, as gold prices rose 1.1% to nearly $1242/oz.
ETF Securities’ Gold ETPs saw $141m inflows last week while oil ETPs recorded net outflows of $31.4m.
The safe-haven status of gold appears to be the driving force in the market at present, with investors putting expectations of US rate rises later in the year to one side for now. Nitesh Shah, Director – Commodities Strategist at ETF Securities said, “While the US Federal Reserve will likely increase rates three times this year, inflation will remain stubbornly high, maintaining a low real rate environment. Investors are questioning whether the Fed can follow through on its hawkish rhetoric and engineer rising real rates. The US dollar is likely to remain weak in the first half of the year, which will also be gold price supportive.”
Shah expects the gold price to end the year at $1230 with a possible mid-year peak of around $1300. The ETFS Physical gold (LON: PHAU), has returned 6.7% YTD and currently has $5.780bn AUM with fees of 0.39%.
In industrial metals, ETF Securities’ ETPs saw inflows of $22.5m last week as investors digest Indonesia’s plans to relax a ban on ore exports. The announcement made in January weighed on industrial metal prices as the lifting of the ban in place since 2014 would increase global supply. However, the impact will likely be limited because free shipments apply to companies that are already building processing plants and for a maximum of five years. Following the announcement, nickel prices initially fell by 8% before surging up again, triggering S$11m inflows to nickel ETPs. The ETFS Industrial Metals (LON: AIGI) has returned 9.1% YTD with AUM of $270m and fees of 0.49%.
Precious metals with industrial applications also saw strong inflows last week. Platinum ETPs provided by ETF Securities saw $8.7m inflows as prices rose 1.7% on better-than-expected auto sales in most major economies. However, the volatility of the South African Rand combined with the ever-present potential for political upheaval will likely remain a headwind for the platinum group metals.
Meanwhile oil ETPs offered by ETF securities recorded outflows for the third consecutive week as US oil production continues to recover. On the oil flows Shah said, “Investors are taking profits as there is a limited upward potential in prices over the medium term and last week saw US$31.4mn outflows from oil ETPs with investors mainly selling WTI crude. Brent ETPs recorded inflows of $10m. The difference between the flows of WTI and Brent ETPs reflects the traditional view that Brent is more affected by the decline in European oil fields and OPEC production policy while WTI is mainly driven by US oil production, particularly US Shale oil. The massive increase in US crude oil imports (to a four and a half year high) and the trend increase in rig count in the US partly offset the reduction in oil supply of around 1.5m barrels per day last month, suggesting energy prices overextended recently.” The ETFS WTI Crude Oil (LON: CRUD) has fallen 2.9% YTD with AUM of $788m while the ETFS Brent Crude (LON: BRNT) is down 3.1% YTD and has AUM of $109m. Both have fees of 0.49%.