For now, Pros Hold Back on Bullish Gold Bets

The SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) are still among this year’s best-performing non-leveraged commodities exchange traded products. But over the past month, the major gold ETFs are each off about 2.5%.

A few minor bumps in an otherwise bullish road for bullion is not preventing some analysts from making overtly bullish calls on the yellow metal. Gold and gold-related assets, including miners exchange traded funds, fell after the release of the Federal Reserve’s July meeting minutes that revealed the U.S. central bank is comfortable with the idea of raising interest rates.

SEE MORE: 31 Gold ETFs Investors Should Size Up

Gold has enjoyed greater demand in a low interest-rate environment as the hard asset becomes more attractive to investors compared to yield-bearing assets. However, traders lose interest in gold when rates rise since the bullion does not produce a yield.

Specifically, investment in gold jumped to 448 metric tons in the second quarter, or more than double the figure of the same period year-over-year, largely due to a year-over-year increase in ETF investment to 236.8 metric tons, compared to a 23 metric ton outflow the year prior.


Bullish gold “positions were subsequently trimmed and according to the CFTC’s weekly Commitment of Traders data up to August 30 released on Friday speculators added to  shorts and cut to longs for a net reduction in bullish bets of  2.7 million ounces to 23.8 million ounces or 740 tonnes,” reports Frik Els for

SEE MORE: Record Investment Demand for Gold ETFs