Gold Edges Toward $1,400, As ETF Holdings Jump
Gold prices edged up Monday following gains last week built largely on anticipation that the Federal Reserve may hold off on reducing the pace of monetary stimulus. Meanwhile, data last week showed a record daily inflow for gold exchange traded products.
Gold for December delivery picked up 10 cents to $1,395 an ounce in electronic trading, with prices for the most-active contract remaining at their highest level since June 6, according to FactSet data.
The market on Monday is due to receive a report on U.S. durable-goods orders for July. Economists polled by MarketWatch expect a decline of 4.9%.
Analysts at Barclays said exchange traded products recorded their biggest daily inflow since Jan. 1 on Friday at 5.8 tonnes, with holdings of SPDR Gold Trust rising by 6.6 tonnes.
“Flows for the month-to-date remain negative at 17 tonnes but the pace of outflows has showed signs of slowing as equity markets have weakened and prices have risen, meaning fewer ETPs are loss-making,” said analysts at Barclays, in a note on Monday.
Meanwhile, data from the Commodity Futures Trading Commission for the week ended Aug. 20 showed money mangers increased bets that gold prices would extend gains. Analysts at Barclays said this was in part due to short coverings, but fresh long positions were also being established.
“Gross short positions are now at their lowest since April, suggesting the scope for further aggressive short covering may slow,” said Barclays analysts, who added that after weaker-than-expected U.S. new-home sales, it will be key to track if gold sentiment is changing and those fresh longs continue to build.
“This is the first increase in gross longs in four weeks and there have not been consecutive weeks of an increase since April,” said the analysts.
Analysts at Barclays said exchange traded products recorded their biggest daily inflow since Jan. 1 on Friday at 5.8 tonnes, with holdings of SPDR Gold Trust rising by 6.6 tonnes.
“Flows for the month-to-date remain negative at 17 tonnes but the pace of outflows has showed signs of slowing as equity markets have weakened and prices have risen, meaning fewer ETPs are loss-making,” said Barclays analysts in a note on Monday.
“Given that we continue to expect tapering to be announced in September and that we expect the dollar to strengthen, ETP holdings are likely to remain fragile but flows will remain a key area to track.”
The metal on Friday surged $25, or 1.8%, on the Comex division of the New York Mercantile Exchange as “surprisingly weak new-home sales figures in the U.S. during July may be a concern for the Fed, and this is supporting the gold price,” CMC Markets chief market analyst Ric Spooner said in a note Monday.
Friday’s rally resulted in a 1.9% gain for gold for last week as a whole.
Sales of new U.S. homes dropped 13.4% to a seasonally adjusted annual rate of 394,000 in July, according to government data. Economists polled by MarketWatch had expected sales to pull back in July to a rate of 485,000.
Gold prices are seen as a beneficiary of monetary stimulus by the Federal Reserve, and the soft home sales data raised some anticipation that the Fed would delay the reduction of its stimulus. The Fed currently buys $85 billion a month in assets.
Federal Reserve officials wrapped up their annual retreat this weekend in Jackson Hole, Wyo., and experts attending the conference said it appears the Fed is still aiming to taper asset purchases at its September meeting.
Many attendees, however, told MarketWatch they would prefer to see a delay in tapering until later this year.
Gold remains lower on a year-to-date basis, though the loss has been pared to 17%, in part due to short-covering.
Elsewhere in the metals complex, September silver tacked on 39 cents, or 1.6%, to $24.13 an ounce, adding to last week’s rise of 1.8%.
September copper rose 3 cents, or 0.9%, to $3.38 a pound. Copper last week shed 0.4%.
September palladium picked up $2.65, or 0.4%, to $753.50 an ounce, slightly cutting into its 1.6% decline last week.
But October platinum fell $1.30, or 0.1%, to $1,540.30 an ounce. It finished last week higher by 0.9%.
Source : Marketwatch
