Amid fears September will live up to its reputation as the worst month of the year for stocks and speculation that the U.S. could mount a military offensive against Syria without the support of Western allies, gold’s safe-haven status could be in focus in the coming weeks.
Data indicate hedge funds and other professional market speculators have increased their long exposure to the yellow metal. In the week ending August 27, net long positions in gold futures and options contracts climbed 34% to 97,902 contracts, good for the biggest weekly increase in bullish bets since January, according to data from the U.S. Commodity Futures Trading Commission.
Demand for jewelry, coins and bars will reach as much as 1,000 metric tons in India and China, Bloomberg reported, citing the World Council.
Strong demand from Asia and developing countries’ central banks, coupled with reduced supply from gold recycling and diminished mining supply, appear to have substantially tightened the market, according to ETF Securities. [ETF Securities: Physical Shortage Driving Gold Prices Higher]
Those data points come as major gold ETFs, including the SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and the ETFS Physical Swiss Gold Shares (NYSEArca: SGOL), ranked among August’s top-performing non-leveraged ETFs. For example, SGOL jumped 6.4% last month. [Silver ETFs Easily Top Gold Funds in August]
Gold mining ETFs were also star performers last month. Funds such as the Market Vectors Gold Miners ETF (NYSEArca: GDX) are either loved or hated by traders and technical analysts, but after some mining ETFs touched multi-year lows within the past few months, the group has rallied. That rally could easily continue if speculators that are bullish on gold futures see their thesis validate. [Gold Miners ETFs: Raving Bulls and Raging Bears]