Gold exchange traded funds’ rebound was interrupted Wednesday after support for Switzerland’s referendum to raise bullion holdings declined ahead of a vote at the end of the month.
On Wednesday, the SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) all dipped about 0.3%. Year-to-date, the gold ETFs are down 0.9%.
COMEX gold futures were trading around $1,195.5 per ounce Wednesday.
The gold market has strengthened over the past week as traders anticipated the new Swiss initiative would force the Swiss National Bank to increase its central bank bullion reserves in an attempt to support the franc currency. [Gold ETFs Could Surge on Swiss Central Bank Referendum]
However, a recent poll found that 38% of respondents favored the so-called Save Our Swiss Gold initiative, down from 44% in an earlier poll, whereas 47% respondents were against the initiative, up from 39%, reports Andrew Morse for the Wall Street Journal.
“The fact that the poll for the Swiss Gold Referendum fell short of majority may have aided the market’s sell-off,” Carlos Sanchez, director of commodities and asset management at CPM Group, said in a Reuters article. “Gold has been on a long-term downward trend and it’s much easier to sell into any weakness.”
Swiss voters seem to be growing wary about the prospect of forced gold holdings. The SNB, the Swiss government and large businesses all argue that the proposed initiative would limit the central bank’s ability to adapt to changing market conditions.
The vote will be held place on November 30. The central bank would have to hold at least a fifth of its assets in gold, compared to 7.8% last month, and would be prohibited from selling holdings. Analysts believe the SNB would be required to purchase 1,500 metric tons of gold, or about $62.2 billion at current market rates, to meet requirements.
Gold prices have experienced significant moves in response to central bank policies. For instance, bullion prices have also been gaining after Russia added to its gold reserves in an attempt to support its quickly depreciating ruble currency, Bloomberg reports.
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Tom Lydon’s clients own shares of GLD.