{"id":2357,"date":"2023-11-08T05:58:10","date_gmt":"2023-11-08T05:58:10","guid":{"rendered":"https:\/\/prendergast.net\/?p=2357"},"modified":"2023-11-08T05:58:10","modified_gmt":"2023-11-08T05:58:10","slug":"the-gold-market-needs-another-catalyst-to-drive-etf-inflows-for-stainable-higher-prices","status":"publish","type":"post","link":"https:\/\/prendergast.net\/?p=2357","title":{"rendered":"The gold market needs another catalyst to drive ETF inflows for stainable higher prices"},"content":{"rendered":"
<\/div>\n

The gold market needs another catalyst to drive ETF inflows for stainable higher prices<\/strong><\/span><\/h1>\n

\"\"<\/p>\n

While October was a historic month for the gold market as the precious metal saw a record-high closing price for the month, more is needed to create a sustainable bid in the marketplace, according to analysts at the World Gold Council.<\/p>\n

In October, gold prices rallied nearly 7%, closing out the month at $1,997 an ounce. Since then, the precious metal has struggled to hold its ground at around $2,000 an ounce. December gold futures last traded at $1,974 an ounce, down 0.73% on the day.<\/p>\n

In their latest monthly commentary, analysts at the World Gold Council noted that while geopolitical uncertainty due to the conflict between Israel and Hamas drove speculative safe-haven demand higher, long-term investors are still reluctant to jump into the market according to weak price action in gold-backed exchange-traded products (ETFs).<\/p>\n

“A sustained rally in gold will, in our view, require either continued or worsening political risk, a peak in bond yields and the US dollar, or an equity bear market combined with revived recession risks,” the analysts said.<\/p>\n

Although the gold market needs another catalyst for a sustainable rally above $2,000 an ounce, October’s price action does show how much potential the gold market has as sentiment continues to shift.<\/p>\n

“COMEX net shorts reversals are a historically reliable positive signal for gold prices and have tended to lead ETF flows,” the analysts said. “It is possible that with a full house of investment behind it, including ETFs and futures, gold could break out of the broad range in which it has traded since the middle of 2020.”<\/p>\n

The weakest pillar in the gold market remains investment demand in gold-backed ETFs; however, the WGC said that October flows could signal a bottom in the market.<\/p>\n

Although the gold market saw its fifth consecutive month of outflows, the pace was a lot slower compared to September. The WGC said 37 tonnes of gold, valued at $2 billion, flowed out of global gold-backed ETFs last month.<\/p>\n

However, the WGC noted that assets under management increased by 6% due to gold’s rally last month.<\/p>\n

Year to date, holdings in gold-backed ETFs have dropped by 225 tonnes, valued at $13 billion.<\/p>\n

According to analysts at the WGC, the Federal Reserve’s restrictive monetary policy remains a critical factor for gold as outflows in North American markets led the broader trend.<\/p>\n

According to the WGC, North American-listed funds saw outflows of 27.5 tonnes, valued at $1.5 billion.<\/p>\n

“Surging Treasury yields, the opportunity cost of holding gold, early October overshadowed safe-haven demand from geopolitical risk and equity volatility later in the month. With the economy performing surprisingly well and inflation remaining sticky, the 10-year US Treasury yield touched 5% during the month –the first time since July 2007,” the analysts said.<\/p>\n

Across the Atlantic, the WGC said that European-listed funds saw outflows of 11 tonnes, valued at $622 million.<\/p>\n

“We believe stabilizing yields, as the European Central Bank (ECB) paused its ten-month rate hiking spree and the region’s inflationary pressure continued to slide, geopolitical risks and the rising gold price helped limit losses,” the analysts said.<\/p>\n

Asian markets, which have been a pillar of strength in global ETFs, saw inflows of 1 tonne, valued at $81 million.<\/p>\n

“Between January and October, Asia funds attracted US$1bn (+15t), the only region experiencing positive flows, mainly driven by China and Japan,” the analysts said.<\/p>\n

Finally, other markets, led by Turkey, also saw inflows of 1 tonne.<\/p>\n

As to what turns the tide for gold, the WGC said that investors might need to see lower equity markets to spur renewed interest in the precious metal.<\/p>\n

“Earnings projections remain quite rosy, but prices, particularly the Nasdaq, are rolling over. The index is down more than 10% already from its mid-year peak during what is supposedly the seasonally strongest period. A greater than 20% drop from the peak – a ‘bear market’ – could spur additional interest in gold from investors, concerned perhaps that equity dips are no longer worth buying,” the analysts said.<\/p>\n

\"\"  China continues to dominate the gold market with a 12-month buying spree, adding 23 tonnes in October<\/p>\n

By<\/p>\n

Neils Christensen<\/p>\n

For Kitco News<\/p>\n

Time to Buy Gold and Silver<\/a><\/u><\/span><\/span><\/span><\/p>\n

<\/p>\n

Tim Moseley<\/p>\n","protected":false},"excerpt":{"rendered":"

The gold market needs another catalyst to drive ETF inflows for stainable higher prices While October was a historic month for the gold market as the precious metal saw a record-high closing price for the month, more is needed to create a sustainable bid in the marketplace, according to analysts at the World Gold Council. … Continue reading The gold market needs another catalyst to drive ETF inflows for stainable higher prices<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[2],"tags":[290,291],"_links":{"self":[{"href":"https:\/\/prendergast.net\/index.php?rest_route=\/wp\/v2\/posts\/2357"}],"collection":[{"href":"https:\/\/prendergast.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prendergast.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prendergast.net\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prendergast.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2357"}],"version-history":[{"count":0,"href":"https:\/\/prendergast.net\/index.php?rest_route=\/wp\/v2\/posts\/2357\/revisions"}],"wp:attachment":[{"href":"https:\/\/prendergast.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2357"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prendergast.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2357"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prendergast.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2357"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}