Monday May 01, 2017 19:54
SPDR Gold Shares (NYSE: GLD), the world’s largest physical gold ETF, added 21 tonnes of gold in April, following an outflow of 9 tonnes in March.
This brought the total added since the start of the year to 31 tonnes, according to the data compiled by SPDR.
The data also shows what has been a rocky start to the year with an outflow of 23 tonnes in January, followed by a positive surge of 42 tonnes in February. Currently, overall investment flows into the ETF stand at 853.36 tonnes.
April’s monthly figures are significant and could be a good sign for bulls if the strong demand lasts, senior economic advisor for Rosland Capital, Jeffrey Nichols, told Kitco News.
“If we see continued growth in ETF gold holdings over a period of time or a larger accumulation now, it would be a bullish factor. Twenty one tonnes is a significant amount,” he said.
This boost, however, doesn’t reflect broad participation in the gold market because it just shows a small number of hedge funds and institutional speculators buying ETFs, which is more liquid than actually buying physical gold, Nichols explained.
“It doesn’t mean that the whole world is onto gold. In just means that the type of investors that participate in gold ETFs have been a little more positive in their view on gold and willing to take on more holdings,” he said.
Gold Falls to 3-Week Lows
Gold prices tumbled 1% on the first day of May to reach a three-week low. June gold futures settled at $1,255.50 on Monday, while spot gold on Kitco.com was trading at $1,255.90 at the time of publication.
The next few days will represent a major test for the gold market, according to Nichols. If prices are resilient and manage to keep this level without falling lower, it could mean more strength to come, he noted.
“The issue is what technical damage has this sell-off in the price of gold has done. But, it is too soon to speculate on that. We are at an important price jump here. If the price holds around the current levels and comes up a bit, traders will interpret it as a positive for gold because it provides more support in the future and suggests that metal will probably rise back to just under $1,300 again,” Nichols said.
Things to watch this week include the Federal Reserve interest rate announcement on Wednesday and a slate of macroeconomic data out of the U.S., such as ISM non-manufacturing, ADP jobs report and non-farm payrolls.
With no rate change expected, investors will be carefully watching the tone of the Fed’s statement. “The announcement will not be significant, unless they make a strong statement, where they say rates will be raised more rapidly or more slowly,” Nichols added.
By Anna Golubova
For Kitco News