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Revived Gold ETP Inflows This Year

The U.S. Comex gold futures ended up almost flat last week after a 0.77% drop last Friday as the U.S. private payroll numbers were much stronger than expected. This week, the gold futures have fallen 0.31% to $1,316.50 although on Wednesday morning in Asia, the prices touched $1,325. Last week, the S&P 500 Index and the Euro Stoxx 50 Index have risen 1.28% and 1.96% respectively while the CRB Commodities Index has fallen 1.31%. In the past two days, the S&P 500 Index has dropped 1.06% after reaching an all-time high on 3 July while the Euro Stoxx 50 Index has plunged 2.63%. The U.S. ten-year government bond yield fell about 9bp to 2.556% this week. The Dollar Index has risen 0.51% this month.

How Strong is the U.S. Labour Market?
Last Thursday, the U.S. June non-farm payrolls were 73,000 higher than expected at 288,000 while the unemployment rate fell 0.2 point to 6.1%. The number of job openings rose to 4.64 million, the highest level since June 2007. Nevertheless, the number of part-time workers who prefer full-time jobs has jumped to the highest level this year to 7.5 million with the average work week remaining stagnant at 34.5 hours for four consecutive months. This means that the labour market is not in full swing yet. This week, two U.S. Fed governors respectively forecasted that the U.S. GDP growth will average two to 2.5% and that inflation will likely stay below two percent until 2018. The governors sounded more dovish in front of the Fed FOMC minutes release on Wednesday. 

Revived Investors Interests in Gold
The holdings in the SPDR Gold Trust, gold’s largest ETP, have jumped almost ten tons this week to 800.28 metric tons on Tuesday, two tons higher than the level as of year-end. The managed money net combined gold positions jumped by almost 20% during the week ending 1 July, approaching the highest level in mid-March this year. This was led by a 30% decline in the number of short contracts. Continued geopolitical risks, a fear of rising inflation, a U.S. Fed willing to hold interest rates low for a considerable time period, and traders’ large short positions at year-end have all contributed to the gold price rally this year.

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09 Jul 2014 | Categories: Gold

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