A number of disappointing data releases led investors to pare back expectations for global growth. US Q1 GDP printed at 2.5% on Friday, falling short of the 3.0% expected; the HBSC flash Chinese manufacturing PMI fell to 50.4 in April from 51.6 in March; and the German IFO business climate fell to 104.2 in April from 106.7 in March.

Investors appeared to look through the number and continued to move into cyclically-sensitive platinum, palladium and silver ETPs even as follow-through selling of gold ETPs continued.

Gold ETP follow-though selling continues despite surge in demand for coins and bars. Last week investors withdrew US$157mn from gold ETPs, bringing the monthly outflow to US$419mn. Gold ETP holders continue to sell despite strong demand in the physical coin, bullion and jewellery markets. The 15% fall in prices experienced between the 12th and 15th April has brought out bargain-hunters in the physical market. Trading in the Shanghai Gold Exchange’s benchmark contract has been more than four times last year’s daily average every day since the 16th of April. Last week the U.S. Mint suspended sales of the smallest gold coins after demand more than doubled. Demand in India and China has been particularly elevated with widespread reports of traders running out of physical stock of the metal. Gold prices rose 3.2% last week, driven by physical buying.

Cyclical precious metal ETPs continue to attract investors. In contrast to gold ETPs, interest in cyclical precious metal ETPs continued to bounce back from the technical sell-off two weeks ago. For example, ETFS Palladium Trust (PALL) received inflows of US$19.8mn, the largest since February 2012, while ETFS Physical Platinum (PHPT) attracted US$8.7mn. Long silver ETPs saw a seventh consecutive week of inflows (US$5.3mn last week). Increasing demand for platinum group metals from the jewellery and autocatalyst sectors in emerging markets and the US, combined with on-going supply concerns are likely to keep the metals in a supply deficit this year. Net long speculative positions in silver have fallen a long way in recent months (over 2 standard deviations below the 5-year average), opening up a potentially attractive entry point for investors.

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