Heavy Gold ETF Outflows Fail to Dent Price as US Stocks Cheer Jobs Data
Thursday, 8/08/2024 16:02
The PRICE of GOLD rallied in London trade Thursday, halving this week's earlier $100 drop despite heavy outflows from the largest gold-backed ETF trust funds as global stock markets cut their rebound from Monday's crash but US equities opened the day higher.
"Stocks climb as jobs data quell economic jitters," says a headline on Bloomberg after new claims for US unemployment benefit came in lower than expected on data for last week.
But the
4-week moving average of initial claims rose to its highest since September last year, and continuing claims last week hit their highest number since November 2021.
The Federal Reserve will next month slash US interest rates by half-a-point from today's 2-decade high of 5.33%
according to nearly 3-in-5 trader positions in Fed Funds futures contracts.
The Gold/Silver Ratio meanwhile dropped back towards 88 after hitting 89 again this morning – a level reached this week by
silver's fastest drop relative to gold since the Covid Crash of early 2020 – as the price of the 'safe haven' asset rose to $2420 and the more industrially-useful precious metal popped half-a-dollar higher to $27.45 per Troy ounce.
The giant SLV silver ETF yesterday expanded to need an additional 100 tonnes of bullion backing, reaching its largest size in a month with a net investment inflow of 0.7%.
Giant gold ETFs the GLD and IAU in contrast both saw heavy outflows on Wednesday, shrinking by 0.5% and nearly 3.0% respectively.
That took the GLD down its smallest size so far in August, while world No.2 gold ETF the IAU shrank to its smallest since mid-February.
Central-bank and asset managers'
gold demand "has been an Eastern phenomenon" in 2024-to-date says Joe Cavatoni, business strategist for the mining sector-owned World Gold Council in the Americas, "particularly in Asia, where there's been strategic allocation to gold.
"In the Western investment market, you've seen speculators trying to get ahead of a [US Fed] rate cut" by betting on higher gold prices through derivatives market's such as the CME's
Comex gold futures and options contracts, he says.
"But actually over the past 2 months we've been looking at [the] very transparent
gold ETF market and
seeing Dollars coming back [into gold], particularly in Europe."
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By tonnage, European gold ETFs expanded by 2.7% across June and July
according to data compiled by the WGC, while North American ETFs grew by 0.8%.
Asia plus the rest of the world meanwhile expanded by 4.9% over the past 2 months, but they still account for only 1/13th of the sector's global assets now under management.
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