Comex Gold Bulls and GLD ETF Surge See Price Steady Below Latest Record Highs
Monday, 3/18/2024 14:25
The GOLD PRICE rose on Monday after the giant GLD gold ETF saw its largest daily expansion in 5 months and speculators in Comex futures and options grew their bullish positions to a 2-year high ahead of this week's packed schedule of central-bank meetings and announcements, led by the Bank of Japan, the US Federal Reserve and the UK's Bank of England,
writes Atsuko Whitehouse at BullionVault.
Spot gold prices edged higher after falling 0.5% overnight to a 1-week low of $2146 per Troy ounce early Monday morning.
That came after the yellow metal slipped 0.4% last week from a run of
new all-time record gold price highs amid growing expectations that the Federal Reserve won't cut interest rates as soon or as deeply as hoped in 2024 given
hotter-than-expected US inflation data.
Despite last week's slip in the gold price, gold-backed ETF trust funds expanded as a group on Friday, continuing to defy the previous
long-term correlation of gold ETF sizes moving together with prices, as the SPDR Gold Trust (NYSEArca: GLD) experienced new investor inflows while the iShares gold ETF (NYSEArca: IAU) halted its liquidation.
The GLD on Friday saw its shares in issue swell to need an additional 15 tonnes of bullion backing, marking the largest increase since mid-October when the conflict between Israel and Hamas intensified.
But while the 1-day inflow erased all GLD outflows seen so far this month, the combined holdings of the GLD and IAU are still 1/3rd below the peak of September 2020, back when the gold price traded 17% below current levels.
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Together, the world's 2 largest gold ETF products have erased all gains in size made during the Covid-19 pandemic, shrinking despite the new all-time gold price highs made on the Russia-Ukraine war, the US mini-banking crisis, and the conflict between Israel and Hamas, fading to the smallest level since July 2019.
"Friday's significant increase in
gold ETFs is noteworthy, " says Koichiro Kamei, a financial and precious-metals analyst in Tokyo, noting that outflows from physically backed gold ETFs worldwide continued for the 9th consecutive month in February.
"Amid receding speculation over US Fed interest rate cuts, the question of whether gold ETFs will continue to expand or not will be the focus of attention in the gold market."
Latest data also show that hedge funds and other leveraged speculators in Comex gold futures and options further increased their bullish betting on gold as a group in the week-ending last Tuesday, growing their net long position by more than 1/5th to the largest since Western nations imposed heavy financial sanctions on Russia following its invasion of Ukraine in February 2022.
Speculators also increased their net bullish betting on silver prices to over a 10-month high last week, latest data from US regulator the Commodities Futures Trading Commission (CFTC) shows.
Finding nearly 60% of its annual demand from industrial uses, the
price of silver today rose 0.3% to $25.26 per Troy ounce after jumping last week despite the slip in gold prices,
snapping the 2 precious metals' more usual connection.
Tuesday will see the Bank of Japan finally raise its key interest rate from below zero, according to market consensus and
'sources' quoted by Tokyo media.
The Federal Reserve's March decision and 'dot plot' forecasts then follow on Wednesday, with the Bank of England also expected to leave its interest rates unchanged on Thursday.
Gold priced in UK Pounds per Troy ounce today steadied at £1693 while wholesale bullion for European investors edged 0.1% higher to €1981 per ounce, also around 1% below the latest all-time spot-market high hit the week before last.
This week also brings monetary policy updates from China, Australia, Switzerland, Indonesia, Norway, Turkey, Taiwan, Russia, Brazil, and Mexico.
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