Last Friday, the Labor Department said U.S. employers added 288,000 jobs in April, the largest monthly gain in over two years, while the unemployment rate fell to 6.3%.
Improving economic data, particularly on the jobs front, has stoked inflows to an array of exchange traded funds, namely equity-based fare, but gold funds could languish as risk appetite increases.
The SPDR Gold Shares (NYSEArca: GLD) rose just 0.14% last with the bulk of that modest gain arguably tied to India’s Akshaya Tritiya festival. India’s festival and wedding season is considered a good time to purchase gold. Gold is India’s second-largest import behind oil. [Indian Holiday Could Boost Gold ETFs]
“The gold price continued to decline last week as equities recovered despite a mere 0.1% print for US Q1 GDP, with investors’ preferring to focus on the green shoots of spring. Better than expected US unemployment data on Friday with the rate dropping to 6.3% from 6.7%, confirmed what most analysts have been expecting, a pickup in economic growth following the extremely harsh winter,” according to a new research note from ETF Securities.
While the jobs report hampered gold ETFs a bit, silver traders opted to focus more on a slack reading of first-quarter GDP out of the U.S., sending the iShares Silver Trust (NYSEArca: SLV) down nearly 1% last week. SLV is down 2.5% over the past month while GLD is lower by 0.4%. About half of silver consumption is tied to industrial use.
Another precious metal with heavy industrial use is palladium, but the ETFS Physical Palladium Shares (NYSEArca: PALL) turned in a solid 1% gain last week on the back of a familiar catalyst: Labor strife in South Africa, the world’s second-largest producer of the metal. [Platinum Group ETFs Shine]
“Strikes in South Africa entered their 15th week. Although above the ground supplies of platinum have limited price appreciation, potential sanctions on Russia, the world’s largest palladium producer, are increasing supply demand deficit expectations in the already constrained palladium market. Negotiations with the Association of Mineworkers and Construction Union (AMCU) appear to have collapsed and the three main producers, Amplats, Implats and Lonmin Plc Lonmin, have announced that they will consult directly with employees on their revised pay offers,” said ETF Securities.
Last week, SLV gained almost $61 million in new assets while $383.3 million was pulled from GLD.
iShares Silver Trust
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of GLD and SLV.