Gold Bounce Stalls as ETFs See More Outflows

May 8th at 11:20am by John Spence

The recovery in gold prices has lost steam in recent sessions as bullion-backed exchange traded funds continue to bleed assets. For example, physical gold holdings in metal ETFs such as SPDR Gold Shares (NYSEArca: GLD) have declined to a four-year low.

“There’s continuous liquidation on the ETFs which keeps gold under pressure. Sentiment is not that good,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers, in a Reuters article.

Bullion holdings in GLD fell to about 1,058 metric tons on Tuesday, the lowest since early 2009. [Gold ETF Asset Flows are a New Market Indicator]

So far this year, the world’s largest gold ETF has experienced net redemptions of $14.4 billion, according to IndexUniverse flow data.

“There’s a lot of betting against gold going on,” said Ben Traynor, chief economist at BullionVault, in a MarketWatch report.

“Professional money managers have built up a sizeable short position,” he said. “At the same time, the ETFs continue to lose metal, which makes would-be gold investors circumspect.”

SPDR Gold Shares

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Full disclosure: Tom Lydon’s clients own GLD.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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