Gold, Oil ETPs drive investment in Commodities to $5 bn mark in January

UNITED STATES February 27 2015 1:33 PM

NEW YORK (Scrap Register): The investor interest in commodities picked up at the start of the year with the sector seeing investment inflows of almost $5 billion in January, “their highest in more than two years sharply reversing a period of consistent monthly outflows from commodity investments dating back to September 2014,” said Barclays in a Research note.

However, not all commodities are seeing the same interest. Barclays says that the favorite investment through exchange-traded products is oil and gold.

“Although the uncertainty in Europe, sparked initially by the SNB announcement and the Greek elections, has spurred interest in gold, the European listed products themselves have drawn only modest interest, and it is GLD, the largest physically backed gold ETP, that has registered a hefty inflow,” they added.

However the analysts are not optimistic that this trend in the gold market will last, noting that the pace of inflows has slowed recently.

“When the gold market refocuses on the U.S. and the scope for a rate hike, prices are likely to come under pressure and ETPs are also likely to waver, although at a slower pace that the speculative positions that are scaled back quickly,” Barclays added.