Holdings of gold at bullion-backed exchange traded funds, such as the SPDR Gold Shares (NYSEArca: GLD), are declining after investors pulled cash from the ETFs last month despite an uptick in global geopolitical tensions.
“Global exchange traded funds backed by physical gold saw outflows last week of 6.5 tonnes, dropping total holdings to 1,726.4 tonnes, not far off four-year lows of 1,708 reached in June,” reports Frik Els for Mining.com.
Last month, investors pulled the equivalent of 17 tons of gold from physically-backed ETFs, a stunning reversal from July, which saw the best month of inflows to gold ETFs since November 2012, according to Mining.com.
GLD, which briefly spent time as the world’s largest ETF when gold hit its nominal record high in 2011, and rival gold ETFs are contending with slack demand in some key markets. Recent data indicate imports through Shanghai exchanges have increased, but Chinese demand plunged more than 50% in the second quarter. [Gold ETFs Lose Predictive Power]
Indian demand is expected to falter by as much as 13% to 850 metric tons this year, the lowest level since 2009, due to the country’s tariff on bullion imports implemented last year as a means of cutting a widening current-account deficit. China and India are the world’s two largest gold consumers. [China Demand Weighs on Gold ETFs]
In dollar terms, investors yanked a combined $255 million from GLD, the world’s largest gold ETF, and the iShares Gold Trust (NYSEArca: IAU) last month.
Outflows from gold ETFs have not stopped investors from allocating cash to silver ETFs. Last week brought the “addition of 45.3 tonnes in the holdings of silver-backed ETFs, bringing the total within shouting distance of October last year’s record 20,121 tonnes,” according to Mining.com.