Largest Gold ETF Sees Quarterly Outflow on Stronger Dollar

July 2nd at 8:13am by John Spence

Investors pulled money from the largest gold ETF in the second quarter as the precious metal fund ended the period with a loss on a resurgent U.S. dollar.

Bullion holdings in SPDR Gold Shares (NYSEArca: GLD) were on track for a decline of 5 metric tons for the three months ended June 30, according to a Reuters report. It was the first quarterly outflow in a year.

GLD holds about 60% of all physical gold in bullion-backed products and saw a 32-ton inflow in the first quarter, according to the story. [Gold ETFs and the Eurozone Debt Crisis]

The gold ETF lost 4.3% in the second quarter, according to investment researcher Morningstar. The precious metal has been hurt by a rising dollar and disappointment the Federal Reserve didn’t announce additional easing. [What Will Drive the Next Leg of the Gold ETF Bull Market?]

Gold suffered its largest quarterly drop in almost four years, Reuters reported.

“U.S. dollar strength has hampered the gold price and has caused shorter-term tactical investors to reduce positions, particularly in the futures market, over the past quarter,” ETF Securities’ head of research Nicholas Brooks said in the article.

PowerShares DB US Dollar Index Bullish (NYSEArca: UUP) rose 2.6% in the second quarter.

SPDR Gold Shares

Full disclosure: Tom Lydon’s clients own GLD.

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